Calian Reports Record Third Quarter Results
OTTAWA, Aug. 11, 2020 -- Calian Group Ltd. (TSX:CGY) today released its quarterly results for the three-month period ended June 30, 2020.
Third quarter 2020 highlights:
- Record quarterly revenue for the eighth consecutive quarter
- Quarterly revenue of $106 million
- Adjusted EBITDA(1) of $9.0 million
- 75th consecutive profitable quarter
- New contract signings of $154 million
- Dividend of $0.28 per share
Calian (the “Company”) reported revenues for the third quarter of $106 million, representing a 19% increase from the $89 million reported in the same quarter of the previous year.
Adjusted EBITDA(1) for the third quarter was $9.0 million, an increase of 34% from $6.7 million in the same quarter of the previous year. Adjusted net profit,(1) which excludes non-cash items related to recent acquisitions, was $5.6 million for the quarter; this compares to $5.0 million in the same period of the previous year. Net profit for the third quarter was $3.9 million, a decline of 9% from $4.3 million in the same period of the prior year. The decrease in net profit can be attributed to a higher amortization of acquired intangibles in the current year quarter due to recent acquisitions, and in the prior year quarter a one-time gain was recorded in other changes in fair value for a write down of the contingent consideration.
"It is exciting to report another revenue record in the quarter, even in this challenging and turbulent business environment. The successful execution of our continued profitable growth speaks to the critical and essential-service nature of our products and services and the flexibility within our team to adapt to rapid changes in the last few months, particularly in the continuity of service delivery and customer engagements,” stated Patrick Houston, CFO. “Our balance sheet strength continued, ending the quarter with $46 million cash on hand, which supported our completion of two new M&A transactions shortly after quarter-end.”
“During the quarter we experienced impacts to both revenue and earnings due to COVID-19. This was due to the rapid change of work environments requiring us to pause delivery of certain services that were done in person.” Stated Patrick Houston, CFO. “The impact in quarter was a reduction of $8.8M of revenue and $1.7M reduction in EBITDA. We made significant progress in finding alternative arrangements or have since restarted the activity in a safe manner with the assistance of our customers. We currently estimate a revenue impact of $2M to $3M for our fourth fiscal quarter.”
“I am pleased to report Calian’s diversified business again demonstrated strong consolidated results during the quarter. Positive growth and financial results in the Health, Advanced Technologies and Information Technology segments offset a year-over-year quarterly revenue decline for the Learning business,” said Kevin Ford, President and CEO. “Health revenue gained 50% compared to the same period a year earlier, reflecting stronger demand across the business, contribution from our acquisition of Alio & Allphase as well as our new contract with SNC-Lavalin PAE Joint Venture to support the delivery of up to ten 100-bed Mobile Respiratory Care Units for the Government of Canada’s pandemic response efforts. The Advanced Technologies segment posted strong revenue growth of 18% from the prior year quarter, with continued top line contributions from its large ground systems project and our newly launched mobile wireless product. Information Technology revenue gained 9% on stronger demand. Learning segment sales were most affected by the pandemic as training exercises were delayed, leading to segment revenue decline of approximately 29%, even as the segment maintained profitability. We anticipate the impacts of COVID-19 to be significantly reduced in upcoming quarters as activities have resumed.”
“Sales efforts continued to show positive momentum in the quarter with the announcement of multiple large contract renewals and new wins. Health secured new business with SNC-Lavalin PAE Joint Venture, worth up to $26 million in revenue in the first phase, IT secured a contract renewal of $22-million for cyber security and Learning renewed its contract with the Canadian Forces School of Aerospace and Defence with a value of $54M. Overall, we captured $154 million in new contracts during the quarter, ending the period with a revenue backlog of approximately $1.3 billion,” Ford said.
“Post quarter-end, we were excited to announce the close of two acquisitions strengthening the IT and Learning segments. In the Learning segment, we have acquired CTS International, a boutique training firm based in Stavanger, Norway. CTS provides the Learning team with a presence in Europe and the opportunity to pursue new training business with NATO and other defence and commercial customers in the European market. In the IT segment, we acquired EMSEC Solutions, a boutique firm based in Ottawa specializing in radio frequency emission security and technical surveillance countermeasures. Their wealth of cyber security expertise will position Calian into a dominant position in the emissions security field, and provide our cyber solutions team with this market differentiation,” Ford said. “I would like to extend a warm welcome to both the EMSEC and CTS teams — we are excited to have you on board with us at Calian.”
“While earnings have been impacted by the pandemic, our results show Calian has remained resilient through this difficult health crisis and economic downturn. We are continuing on our growth trajectory. We are investing in the business and our long-term growth and innovation, including new Calian products. The Advanced Technologies segment has continued its research and development efforts on new products, including the recent launch of its fourth-generation Decimator D4 spectrum analyzer product, which monitors radio frequency (RF) communications and detects signal issues,” Ford said.
He added: “Once again, I would like to thank all frontline health and essential service workers for their dedication and courage during this very challenging, ongoing public health crisis. Our own dedicated staff at Calian have been out there delivering essential services like other frontline health workers, Canadian Armed Forces members and many other service workers. From all of us at Calian, we offer our deepest appreciation for your service.”
Calian employs over 3,400 people in its delivery of diverse products and solutions for private sector, government and defence customers in North American and global markets. The Company’s diverse capabilities are delivered through four segments: Advanced Technologies, Health, Learning and Information Technology. The Advanced Technologies segment provides innovative products, technologies and manufacturing services and solutions for the space, communications, defence, nuclear, government and agriculture sectors. The Health segment manages a network of more than 1,800 health care professionals delivering primary care and occupational health services to public and private sector clients across Canada. Learning is a trusted provider of emergency management, consulting and specialized training services and solutions for the Canadian Armed Forces and clients in the defence, health, energy and other sectors. The Information Technology segment supports public- and private-sector customer requirements for subject matter expertise in the delivery of complex IT and cyber security solutions. Headquartered in Ottawa, the Company’s offices and projects span Canada and international markets.
Kevin Ford Patrick Houston Media inquiries:
President and Chief Executive Officer Chief Financial Officer 613-599-8600 x 2298
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.