OTTAWA, Ontario, Feb. 13, 2025 (GLOBE NEWSWIRE) -- Calian® Group Ltd. (TSX:CGY), a diverse products and services company providing innovative healthcare, communications, learning and cybersecurity solutions, today released its results for the first quarter ended December 31, 2024.
Q1-25 Highlights:
Revenue up 3% to $185 million
Gross margin at 31.8%, slightly down from 32.5% last year
Adjusted EBITDA1 of $18 million, down from $21 million last year
Operating free cash flow1 of $13 million, down from $17 million last year
Net debt to adjusted EBITDA1 ratio of 0.6x
Repurchased 101,350 shares in consideration of $4.9 million
Guidance reiterated
Announced new U.S. subsidiary to focus on U.S. government and defence
Financial Highlights
Three months ended
(in millions of $, except per share & margins)
December 31,
2024
20232
%
Revenue
185.0
179.2
3
%
Adjusted EBITDA1
17.8
21.4
(17)
%
Adjusted EBITDA %1
9.6
%
11.9
%
(230)bps
Adjusted Net Profit1
10.5
14.0
(25)
%
Adjusted EPS Diluted1
0.88
1.17
(25)
%
Operating Free Cash Flow1
13.1
17.2
(24)
%
1 This is a non-GAAP measure. Please refer to the section “Reconciliation of non-GAAP measures to most comparable IFRS measures” at the end of this press release. 2 Certain comparative figures have been reclassified to align with the current year's presentation. For more information, please see the selected consolidated financial information section of the management discussion and analysis.
“We closed the quarter as expected and are seeing positive momentum across our diverse end markets, while continuing to benefit from the strong contributions of our recent acquisitions in UK, the U.S. and Canada,” said Kevin Ford, Calian CEO. “The accelerating global demand for defence solutions positions Calian’s expanding footprint to play a critical role in the years ahead. Additionally, discussions among Canadian leaders about increasing military investment and accelerating initiatives are a welcome development. We remain on track to deliver another record year and are making progress against our long-term objectives.”
First Quarter Results
Revenues increased 3%, from $179 million to $185 million, representing the highest first quarter revenue on record. Acquisitive growth was 8% and was generated by the acquisitions of Decisive Group, the nuclear assets from MDA Ltd and Mabway. Organic growth was down 5%, as growth generated in global Defence was offset by declines in the pace of domestic Defence training and delays in large projects in its Space and IT infrastructure markets.
Gross margin stood at 31.8% and represents the 11th quarter above the 30% mark. Adjusted EBITDA1 stood at $18 million, down 17% from $21 million last year, primarily impacted by revenue mix and increased investments in our sales and delivery capacity. As a result, adjusted EBITDA1 margin decreased to 9.6%, from 11.9% last year.
Net profit stood at $(1) million, or $(0.08) per diluted share, down from $6 million, or $0.46 per diluted share last year. This decrease in profitability is primarily due to increases in accounting charges related to amortization and deemed compensation expenses from acquisitions as well as increased operating expenses, which was offset by higher gross profit. Adjusted net profit1 was $10 million, or $0.88 per diluted share, down from $14 million, or $1.17 per diluted share last year.
Liquidity and Capital Resources
“In the first quarter we generated $13 million in operating free cash flow1, representing a 73% conversion rate from adjusted EBITDA1,” said Patrick Houston, Calian CFO. “We used our cash and a portion of our credit facility to pay contingent earn out liabilities for $11 million and make capital expenditure investments for $1 million. We also provided a return to shareholders in the form of dividends for $3 million and share buybacks for $5 million. We ended the quarter with a net debt to adjusted EBITDA1 ratio of 0.6x, well-positioned to pursue our growth objectives,” concluded Mr. Houston.
Normal Course Issuer Bid
In the three-month period ended December 31, 2024, the Company repurchased 101,350 shares for cancellation in consideration of $4.9 million.
Announced U.S. Subsidiary to Focus on U.S. Government and Defence
On December 4, 2024, Calian announced the launch of an independent U.S.-focused subsidiary, Calian US, Inc. It is committed to securing U.S. government contracts by ensuring full compliance with all relevant regulations. To facilitate this, Calian US will be established as an independent subsidiary and will pursue the necessary certifications to operate effectively within the U.S. market.
Quarterly Dividend
On February 12, 2025, Calian declared a quarterly dividend of $0.28 per share. The dividend is payable March 12, 2025, to shareholders of record as of February 26, 2025. Dividends paid by the Company are considered “eligible dividend” for tax purposes.
Guidance Reiterated
The table below presents the FY25 guidance based on the new definition of adjusted EBITDA.
Guidance for the year ended September 30, 2025
FY24 Results
YOY Growth at Midpoint
(in thousands of $)
Low
Midpoint
High
Revenue
800,000
840,000
880,000
746,611
12
%
Adj. EBITDA1
96,000
101,000
106,000
92,159
10
%
This guidance includes the full-year contribution from the Decisive Group acquisition, closed on December 1, 2023, the nuclear asset acquisition from MDA Ltd., closed on March 5, 2024 and the Mabway acquisition, closed on May 9, 2024. It does not include any other further acquisitions that may close within the fiscal year. The guidance reflects another record year for the Company and positions it well to achieve its long-term growth targets.
At the midpoint of the range, this guidance reflects revenue and adjusted EBITDA1 growth of 12% and 10%, respectively, and an adjusted EBITDA1 margin of 12.0%. It would represent the 8th consecutive year of double-digit revenue growth and record revenue and adjusted EBITDA1 levels.
We keep the world moving forward. Calian® helps people communicate, innovate, learn and lead safe and healthy lives. Every day, our employees live our values of customer commitment, integrity, innovation, respect and teamwork to engineer reliable solutions that solve complex challenges. That’s Confidence. Engineered. A stable and growing 40-year company, we are headquartered in Ottawa with offices and projects spanning North American, European and international markets. Visit calian.com to learn about innovative healthcare, communications, learning and cybersecurity solutions.
Product or service names mentioned herein may be the trademarks of their respective owners.
Certain information included in this press release is forward-looking and is subject to important risks and uncertainties. The results or events predicted in these statements may differ materially from actual results or events. Such statements are generally accompanied by words such as “intend”, “anticipate”, “believe”, “estimate”, “expect” or similar statements. Factors which could cause results or events to differ from current expectations include, among other things: the impact of price competition; scarce number of qualified professionals; the impact of rapid technological and market change; loss of business or credit risk with major customers; technical risks on fixed price projects; general industry and market conditions and growth rates; international growth and global economic conditions, and including currency exchange rate fluctuations; and the impact of consolidations in the business services industry. For additional information with respect to certain of these and other factors, please see the Company’s most recent annual report and other reports filed by Calian with the Ontario Securities Commission. Calian disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. No assurance can be given that actual results, performance or achievement expressed in, or implied by, forward-looking statements within this disclosure will occur, or if they do, that any benefits may be derived from them.
Calian · Head Office · 770 Palladium Drive · Ottawa · Ontario · Canada · K2V 1C8 Tel: 613.599.8600 · Fax: 613-592-3664 · General info email: info@calian.com
CALIAN GROUP LTD.
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
As at December 31, 2024 and September 30, 2024
(Canadian dollars in thousands, except per share data)
December 31,
September 30,
2024
2024
ASSETS
CURRENT ASSETS
Cash and cash equivalents
$
61,040
$
51,788
Accounts receivable
157,542
157,376
Work in process
20,205
20,437
Inventory
29,442
23,199
Prepaid expenses
23,805
23,978
Derivative assets
31
32
Total current assets
292,065
276,810
NON-CURRENT ASSETS
Property, plant and equipment
41,234
40,962
Right of use assets
41,746
36,383
Prepaid expenses
7,157
7,820
Deferred tax asset
3,376
3,425
Investments
3,875
3,875
Acquired intangible assets
123,297
128,253
Goodwill
213,925
210,392
Total non-current assets
434,610
431,110
TOTAL ASSETS
$
726,675
$
707,920
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities
$
123,945
$
124,884
Provisions
2,454
3,075
Unearned contract revenue
40,263
41,723
Lease obligations
5,556
5,645
Contingent earn-out
29,709
39,136
Derivative liabilities
169
92
Total current liabilities
202,096
214,555
NON-CURRENT LIABILITIES
Debt facility
115,750
89,750
Lease obligations
39,425
33,798
Unearned contract revenue
17,256
14,503
Contingent earn-out
2,773
2,697
Deferred tax liabilities
23,738
25,862
Total non-current liabilities
198,942
166,610
TOTAL LIABILITIES
401,038
381,165
SHAREHOLDERS’ EQUITY
Issued capital
227,561
225,747
Contributed surplus
4,555
6,019
Retained earnings
84,038
91,268
Accumulated other comprehensive income (loss)
9,483
3,721
TOTAL SHAREHOLDERS’ EQUITY
325,637
326,755
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
$
726,675
$
707,920
Number of common shares issued and outstanding
11,765,055
11,802,364
CALIAN GROUP LTD.
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF NET PROFIT
For the three months ended December 31, 2024 and 2023
(Canadian dollars in thousands, except per share data)
Three months ended
December 31,
2024
2023
Revenue
$
185,047
$
179,179
Cost of revenues
126,246
120,961
Gross profit
58,801
58,218
Selling, general and administrative
38,105
34,145
Research and development
2,896
2,719
Share based compensation
1,091
1,190
Profit before under noted items
16,709
20,164
Restructuring expense
692
—
Depreciation and amortization
11,540
9,006
Mergers and acquisition costs
2,320
1,980
Profit before interest income and income tax expense
2,157
9,178
Interest expense
1,783
1,547
Income tax expense
1,350
2,106
NET PROFIT (LOSS)
$
(976)
$
5,525
Net profit (loss) per share:
Basic
$
(0.08)
$
0.47
Diluted
$
(0.08)
$
0.46
CALIAN GROUP LTD.
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three months ended December 31, 2024 and 2023
(Canadian dollars in thousands)
Three months ended
December 31,
2024
2023
CASH FLOWS GENERATED FROM (USED IN) OPERATING ACTIVITIES
Net profit
$
(976
)
$
5,525
Items not affecting cash:
Interest expense
1,295
1,098
Changes in fair value related to contingent earn-out
558
726
Lease obligations interest expense
488
449
Income tax expense
1,350
2,106
Employee share purchase plan expense
174
162
Share based compensation expense
917
1,013
Depreciation and amortization
11,540
9,006
Deemed compensation
1,563
604
16,909
20,689
Change in non-cash working capital
Accounts receivable
(167
)
(11,189
)
Work in process
232
(898
)
Prepaid expenses and other
(2,739
)
(74
)
Inventory
(6,241
)
(2,590
)
Accounts payable and accrued liabilities
(858
)
15,516
Unearned contract revenue
1,294
206
8,430
21,660
Interest paid
(1,783
)
(1,547
)
Income tax paid
(2,265
)
(2,575
)
4,382
17,538
CASH FLOWS GENERATED FROM (USED IN) FINANCING ACTIVITIES
Issuance of common shares net of costs
881
694
Dividends
(3,292
)
(3,314
)
Draw on debt facility
26,000
56,000
Payment of lease obligations
(1,442
)
(1,171
)
Repurchase of common shares
(4,926
)
(1,357
)
17,221
50,852
CASH FLOWS USED IN INVESTING ACTIVITIES
Business acquisitions
(11,215
)
(47,457
)
Property, plant and equipment
(1,136
)
(2,400
)
(12,351
)
(49,857
)
NET CASH INFLOW (OUTFLOW)
$
9,252
$
18,533
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
51,788
33,734
CASH AND CASH EQUIVALENTS, END OF PERIOD
$
61,040
$
52,267
Reconciliation of Non-GAAP Measures to Most Comparable IFRS Measures
These non-GAAP measures are mainly derived from the consolidated financial statements, but do not have a standardized meaning prescribed by IFRS; therefore, others using these terms may calculate them differently. The exclusion of certain items from non-GAAP performance measures does not imply that these are necessarily nonrecurring. From time to time, we may exclude additional items if we believe doing so would result in a more transparent and comparable disclosure. Other entities may define the above measures differently than we do. In those cases, it may be difficult to use similarly named non-GAAP measures of other entities to compare performance of those entities to the Company’s performance.
Management believes that providing certain non-GAAP performance measures, in addition to IFRS measures, provides users of the Company’s financial reports with enhanced understanding of the Company’s results and related trends and increases transparency and clarity into the core results of the business. Adjusted EBITDA excludes items that do not reflect, in our opinion, the Company’s core performance and helps users of our MD&A to better analyze our results, enabling comparability of our results from one period to another.
Adjusted EBITDA
Three months ended
December 31,
2024
20231
Net profit
$
(976
)
$
5,525
Share based compensation
1,091
1,190
Restructuring expense
692
—
Depreciation and amortization
11,540
9,006
Mergers and acquisition costs
2,320
1,980
Interest expense
1,783
1,547
Income tax
1,350
2,106
Adjusted EBITDA
$
17,800
$
21,354
Adjusted Net Profit and Adjusted EPS
Three months ended
December 31,
2024
20231
Net profit
$
(976
)
$
5,525
Share based compensation
1,091
1,190
Restructuring expense
692
—
Mergers and acquisition costs
2,320
1,980
Amortization of intangibles
7,334
5,325
Adjusted net profit
10,461
14,020
Weighted average number of common shares basic
11,773,465
11,812,574
Adjusted EPS Basic
0.89
1.19
Adjusted EPS Diluted
$
0.88
$
1.17
Operating Free Cash Flow
Three months ended
December 31,
2024
20231
Cash flows generated from operating activities (free cash flow)
$
4,382
$
17,538
Adjustments:
M&A costs included in operating activities
199
650
Change in non-cash working capital
8,479
(971)
Operating free cash flow
$
13,060
$
17,217
Operating free cash flow per share - basic
1.11
1.46
Operating free cash flow per share - diluted
1.10
1.44
Operating free cash flow conversion
73
%
81
%
Net Debt to Adjusted EBITDA
December 31,
September 30,
2024
20231
Cash
$
61,040
$
52,267
Debt facility
115,750
93,750
Net debt (net cash)
54,710
41,483
Trailing twelve month adjusted EBITDA
88,602
65,987
Net debt to adjusted EBITDA
0.6
0.6
Operating free cash flow measures the company’s cash profitability after required capital spending when excluding working capital changes. The Company’s ability to convert adjusted EBITDA to operating free cash flow is critical for the long term success of its strategic growth. These measurements better align the reporting of our results and improve comparability against our peers. We believe that securities analysts, investors and other interested parties frequently use non-GAAP measures in the evaluation of issuers. Management also uses non-GAAP measures in order to facilitate operating performance comparisons from period to period, prepare annual operating budgets and assess our ability to meet our capital expenditure and working capital requirements. Non-GAAP measures should not be considered a substitute for or be considered in isolation from measures prepared in accordance with IFRS. Investors are encouraged to review our financial statements and disclosures in their entirety and are cautioned not to put undue reliance on non-GAAP measures and view them in conjunction with the most comparable IFRS financial measures. The Company has reconciled adjusted profit to the most comparable IFRS financial measure as shown above.
