Calian Reports Record Results for the Second Quarter
(All amounts in release are in Canadian dollars)OTTAWA, May 14, 2024 (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 second quarter ended March 31, 2024.
*Q2-24 Highlights:*
· Revenue up 19% to $201 million
· Gross margin at 34.8%, up from 30.9% last year
· Adjusted EBITDA^1 up over 50% to $25.7 million
· Operating free cash flow^1 of $17.8 million
· Net liquidity of $157 million
· Appointed President, Advanced Technologies
· Completed the acquisition of the nuclear assets of MDA Ltd. on March 5, 2024
· Completed the acquisition of Mabway on May 9, 2024
· FY24 guidance increased
*Financial Highlights* *Three months ended**
* *Six months ended**
*
(i(in millions of $, except per share & margins) *March 31, **
* *March 31, **
* *2024* *2023* *%* *2024* *2023* *%*
Revenue 201.3 168.5 19 % 380.4 316.1 20 %
Adjusted EBITDA^1 25.7 16.8 53 % 45.2 31.1 45 %
Adjusted EBITDA %^1 12.8 % 10.0 % 277bps 11.9 % 9.8 % 204bps
Net Profit 4.9 4.5 9 % 10.5 9.1 15 %
EPS Diluted 0.41 0.38 8 % 0.87 0.78 12 %
Operating Free Cash Flow^1 17.8 10.7 67 % 32.0 22.8 40 %
^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.]Access the full report on the Calian Financials web page.
Register for the conference call on Wednesday, May 15, 2024, 8:30 a.m. Eastern Time.
We sealed the first half of the year with a record quarter,” said Kevin Ford, Calian Chief Executive Officer. “Revenues, gross margin and adjusted EBITDA all hit historical highs demonstrating the strength of our business model and the successful execution of our three-year strategic plan. Since the start of FY24, revenues are up 20%, profitability and margins have increased significantly and over one third of our 3-year M&A target agenda has been completed with three acquisitions. Given our solid results in the first half, our confidence for the balance of the year and the contribution from recent acquisitions, we increased our FY24 guidance. We are on track to deliver another record year and one step closer to our objective of reaching one billion dollars by the end of FY26,” stated Mr. Ford.
*Second Quarter Results*
Revenues increased 19%, from $169 million to $201 million. This represents the highest quarterly revenue in the Company’s history and the first time surpassing the $200 million mark in a single quarter. Acquisitive growth was 16% and was generated by the acquisitions of Hawaii Pacific Teleport (“HPT”), Decisive and to a lesser extent the nuclear assets from MDA Ltd. Organic growth was 3% and was driven by double digit growth in Health.
Gross margin reached a record 34.8%, representing its 8^th consecutive quarter above 30%. Adjusted EBITDA^1 reached a record $25.7 million, up over 50% from the same period last year, driven by revenue growth and margin expansion as well as the benefits generated from the restructuring plan implemented midway through the fourth quarter. Adjusted EBITDA^1 margin reached a record 12.8%, up from 10.0% in the same period last year, as a result of a favorable revenue mix and increased volume.
Net profit reached $4.9 million, or $0.41 per diluted share, up from $4.5 million, or $0.38 per diluted share for the same period last year.
*Liquidity and Capital Resources*
“In the second quarter we generated $17.8 million in operating free cash flow^1, representing a 69% conversion rate from adjusted EBITDA^1,” said Patrick Houston, Calian CFO. “We used our cash to repay $25 million of our credit facility and to invest in our business with the acquisition of the nuclear assets of MDA and earnout payments on past acquisitions for a total of $11 million and capital expenditures of $3 million. We also provided a return to shareholders in the form of dividends of $3 million. Given the current level of our share price, we will resume our share buyback program after a temporary pause. We ended the quarter with $157 million in net liquidity, well-positioned to pursue our growth objectives,” concluded Mr. Houston.
*Mabway Acquisition*
On May 9, 2024 Calian agreed to acquire U.K.-based Mabway for up to $46.4 million, including $37.8 million of cash upfront on closing and $8.6 million of earnouts. Mabway is a leader in the management of large-scale defence role-playing environments that simulate real-world operational environments and provides technical engineering education for naval and maritime communities. The company has been a prime supplier to the British Army since 2012. Mabway has several offices across the U.K., a workforce of more than 1,000 ex-military and civilian permanent staff and contractors, and services reaching into Europe and the Middle East. Mabway will be integrated in Calian’s Learning segment.
*Appointed President, Advanced Technologies*
On March 27, 2024, Calian appointed Valerie Travain-Milone as President, Advanced Technologies. Travain-Milone brings extensive leadership experience across GNSS, telecom, space, cybersecurity and digital services. Known for her purpose-driven approach and passion for technology, she has consistently nurtured teams towards success and growth. Holding an MBA in aerospace and with global experience in the Pacific, Europe and North America, her visionary leadership in her past role as CEO of Atos Canada fuelled the company’s expansion and accelerated revenue growth.
*Acquired MDA Ltd. Nuclear Assets*
On March 5, 2024, Calian and MDA Ltd. (MDA), a trusted global mission partner, have completed a transaction in which Calian has purchased assets associated with MDA’s nuclear services. MDA has provided professional services to the Canadian nuclear industry for more than 30 years, supported by a highly specialized team of engineers delivering complex project planning and management for large nuclear outages and refurbishment projects, including experience in nuclear outage tooling. MDA’s nuclear team will be integrated into Calian’s existing Nuclear business within its Advanced Technologies segment.
*Normal Course Issuer Bid*
In the three-month period ended March 31, 2024, as part of its Normal Course Issuer Bid, the Company did not repurchase shares for cancellation. Since the launch of the Normal Course Issuer Bid on September 1, 2023, the Company repurchased 59,320 common shares for cancellation in consideration of $3.0 million.
*Quarterly Dividend*
Today, Calian declared a quarterly dividend of $0.28 per share. The dividend is payable June 11, 2024, to shareholders of record as of May 28, 2024. Dividends paid by the Company are considered “eligible dividend” for tax purposes.
*Guidance Increased *
(in thousands of $) *Guidance for the year ended September 30, 2024* *FY23 Results*
*Growth
Midpoint vs
FY23*
Low Midpoint High
Revenue 750,000 780,000 810,000 658,584 18 %
Adj. EBITDA^1 86,000 89,000 92,000 65,987 35 %
^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 the press release.This guidance includes the full-year contribution from the Hawaii Pacific Teleport acquisition, 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 EBITDA^1 growth of 18% and 35%, respectively, and an adjusted EBITDA^1 margin of 11.4%. It would represent the 7^th consecutive year of double-digit growth and record levels.
*About Calian*
www.calian.com
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.
Media inquiries:
pr@calian.com
613-599-8600 x 2298
Investor Relations inquiries:
ir@calian.com
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DISCLAIMER
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 March 31, 2024 and September 30, 2023*
*(Canadian dollars in thousands, except per share data)* *March 31, * *September 30, * *2024* *2023*
*ASSETS*
CURRENT ASSETS
Cash and cash equivalents $ 45,866 $ 33,734
Accounts receivable 231,379 173,052
Work in process 16,137 16,580
Inventory 25,015 21,983
Prepaid expenses 24,727 19,040
Derivative assets 41 155
Total current assets 343,165 264,544
NON-CURRENT ASSETS
Property, plant and equipment 38,420 37,223
Right of use assets 35,239 34,637
Prepaid expenses 9,997 10,386
Deferred tax asset 1,551 967
Investments 3,673 3,673
Acquired intangible assets 119,804 75,160
Goodwill 193,333 159,133
Total non-current assets 402,017 321,179
TOTAL ASSETS $ 745,182 $ 585,723
*LIABILITIES AND SHAREHOLDERS’ EQUITY*
CURRENT LIABILITIES
Debt facility $ — $ 37,750
Accounts payable and accrued liabilities 188,680 105,550
Provisions 2,148 2,848
Unearned contract revenue 39,410 32,423
Lease obligations 5,106 4,949
Contingent earn-out 27,948 11,263
Derivative liabilities 108 353
Total current liabilities 263,400 195,136
NON-CURRENT LIABILITIES
Debt facility 69,000 —
Lease obligations 32,942 32,057
Unearned contract revenue 21,561 15,592
Contingent earn-out 2,806 2,535
Deferred tax liabilities 20,106 12,031
Total non-current liabilities 146,415 62,215
TOTAL LIABILITIES 409,815 257,351
SHAREHOLDERS’ EQUITY
Issued capital 228,617 225,540
Contributed surplus 5,631 4,856
Retained earnings 99,840 96,859
Accumulated other comprehensive income (loss) 1,279 1,117
TOTAL SHAREHOLDERS’ EQUITY 335,367 328,372
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 745,182 $ 585,723
Number of common shares issued and outstanding 11,854,851 11,812,650
The accompanying notes are an integral part of the unaudited interim condensed consolidated financial statements.*
*
*CALIAN GROUP LTD.*
*UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF NET PROFIT*
*For the three and six months ended March 31, 2024 and 2023*
*(Canadian dollars in thousands, except per share data)* *Three months ended * *Six months ended * *March 31, * *March 31, * *2024* *2023* *2024* *2023*
Revenue $ 201,268 $ 168,543 $ 380,447 $ 316,086
Cost of revenues 131,231 116,452 252,192 218,776
*Gross profit* *70,037* *52,091* *128,255* *97,310*
Selling and marketing 15,014 11,831 27,365 22,974
General and administration 26,636 20,493 50,270 37,893
Research and development 2,695 2,922 5,414 5,343
*Profit before under noted items* *25,692* *16,845* *45,206* *31,100*
Depreciation of property, plant and equipment 2,496 2,252 4,804 4,549
Depreciation of right of use assets 1,468 1,015 2,931 2,022
Amortization of acquired intangible assets 6,149 3,450 11,384 6,811
Restructuring expense 1,495 — 1,495 —
Deemed compensation 911 50 1,515 147
Changes in fair value related to contingent earn-out 4,088 2,562 4,814 3,304
*Profit before interest income and income tax expense* *9,085* *7,516* *18,263* *14,267*
Interest expense 1,734 95 3,281 218
Income tax expense 2,426 2,904 4,532 4,956
*NET PROFIT* *$* 4,925 *$* 4,517 *$* 10,450 *$* 9,093
*Net profit per share**:*
Basic $ 0.42 $ 0.39 $ 0.88 $ 0.78
Diluted $ 0.41 $ 0.38 $ 0.87 $ 0.78
The accompanying notes are an integral part of the unaudited interim condensed consolidated financial statements.*CALIAN GROUP LTD. *
*UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS*
*For the three and six months ended March 31, 2024 and 2023*
* (Canadian dollars in thousands)* *Three months ended * *Six months ended * *March 31, * *March 31, * *2024* *2023* *2024* *2023*
CASH FLOWS GENERATED FROM (USED IN) OPERATING ACTIVITIES
Net profit $ 4,925 $ 4,517 $ 10,450 $ 9,093
Items not affecting cash:
Interest expense 1,426 (27 ) 2,524 (15 )
Changes in fair value related to contingent earn-out 4,088 2,562 4,814 3,304
Lease obligations interest expense 308 122 757 233
Income tax expense 2,426 2,904 4,532 4,956
Employee share purchase plan expense 134 138 296 301
Share based compensation expense 1,010 575 2,023 982
Depreciation and amortization 10,113 6,717 19,119 13,382
Deemed compensation 911 50 1,515 147 25,341 17,558 46,030 32,383
Change in non-cash working capital
Accounts receivable (49,996 (27,455 ) (61,185 ) 7,259
Work in process 1,341 758 443 7,583
Prepaid expenses and other (3,483 ) (2,879 ) (3,557 ) 785
Inventory 3,570 2,942 980 (5,023 )
Accounts payable and accrued liabilities 59,181 19,729 74,697 (7,539 )
Unearned contract revenue 4,534 472 4,740 2,901 40,488 11,125 62,148 38,349
Interest paid (1,734 ) (95 ) (3,281 ) (218 )
Income tax paid (2,966 ) (4,827 ) (5,541 ) (6,605 ) 35,788 6,203 53,326 31,526
CASH FLOWS GENERATED FROM (USED IN) FINANCING ACTIVITIES
Issuance of common shares net of costs 945 865 1,639 1,775
Dividends (3,319 ) (3,280 ) (6,633 ) (6,542 )
Draw on debt facility (24,750 (7,500 ) 31,250 (7,500 )
Payment of lease obligations (1,429 ) (913 ) (2,600 ) (1,922 )
Repurchase of common shares — — (1,357 ) — (28,553 ) (10,828 ) 22,299 (14,189 )
CASH FLOWS USED IN INVESTING ACTIVITIES
Investments — — — (2,689 )
Business acquisitions (10,840 ) (5,735 ) (58,297 ) (8,660 )
Property, plant and equipment (2,796 ) (1,931 ) (5,196 ) (2,731 ) (13,636 ) (7,666 ) (63,493 ) (14,080 )
NET CASH INFLOW (OUTFLOW) $ (6,401 ) $ (12,291 ) $ 12,132 $ 3,257
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 52,267 58,194 33,734 42,646
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 45,866 $ 45,903 $ 45,866 $ 45,903
The accompanying notes are an integral part of the unaudited interim condensed consolidated financial statements.*
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* *Six months ended* *March 31,* *March 31,* *March 31,* *March 31,* *2024* *2023* *2024* *2023*
Net profit $ 4,925 $ 4,517 $ 10,450 $ 9,093
Depreciation of equipment and application software 2,496 2,252 4,804 4,549
Depreciation of right of use asset 1,468 1,015 2,931 2,022
Amortization of acquired intangible assets 6,149 3,450 11,384 6,811
Restructuring expense 1,495 — 1,495 —
Interest expense 1,734 95 3,281 218
Changes in fair value related to contingent earn-out 4,088 2,562 4,814 3,304
Deemed Compensation 911 50 1,515 147
Income tax 2,426 2,904 4,532 4,956
Adjusted EBITDA $ 25,692 $ 16,845 $ 45,206 $ 31,100
*
*
*Operating Free Cash Flow*
*Three months ended* *Six months ended* *March 31,* *March 31,* *March 31,* *March 31,* *2024* *2023* *2024* *2023*
Cash flows generated from operating activities $ 35,788 $ 6,203 $ 53,326 $ 31,526
Property, plant and equipment (2,796 ) (1,931 ) (5,196 ) (2,731 )
Free cash flow *$* *32,992* *$* *4,272* *$* *48,130* *$* *28,795*
Free cash flow $ 32,992 $ 4,272 $ 48,130 $ 28,795
Adjustments:
Change in non-cash working capital (15,147 ) 6,433 (16,118 ) (5,966 )
Operating free cash flow *$* *17,845* *$* *10,705* *$* *32,012* *$* *22,829*
Operating free cash flow per share 1.51 0.91 2.71 1.96
Operating free cash flow conversion 69 % 64 % 71 % 73 %
*
*
*Net Debt to Adjusted EBITDA*
*March 31,* *September 30,* *2024* *2023*
Cash $ 45,866 $ 33,734
Debt facility 69,000 37,750
Net debt (net cash) 23,134 4,016
Trailing twelve month adjusted EBITDA 80,093 65,987
Net debt to adjusted EBITDA 0.3 0.1
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.