(All amounts in release are in Canadian dollars)
OTTAWA, August 10, 2023 – 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 third quarter ended June 30, 2023.
Third quarter highlights:
- Revenue up 11% to $167 million
- Gross margin above 30% for the fifth consecutive quarter
- Adjusted EBITDA1 at $15 million, down 10% compared to Q3 last year
- Operating free cash flow of $11 million
- Cash on hand of $41 million and net liquidity of $221 million
- New contract signings of $131 million
- Completed the acquisition of Hawaii Pacific Teleport on August 1, 2023
- Closed $250 million debt agreement on July 24, 2023
- Implemented restructuring plan for annualized savings of $8 million
- Updated FY23 guidance
| Financial Highlights | Three months ended | Six months ended | ||||
|---|---|---|---|---|---|---|
| (in millions of $, except per share & margins) | June 30, | June 30, | ||||
| 2023 | 2022 | % | 2023 | 2022 | % | |
| Revenue | 166.6 | 150.0 | 11% | 482.6 | 421.6 | 14% |
| Adjusted EBITDA1 | 14.5 | 16.1 | (10%) | 45.6 | 46.9 | (3%) |
| Adjusted EBITDA %1 | 8.7% | 10.8% | (210bps) | 9.4% | 11.1% | (170bps) |
| Net Profit | 4.7 | 6.8 | (32%) | 13.8 | 12.4 | 11% |
| EPS | $0.40 | $0.60 | (33%) | $1.17 | $1.09 | 7% |
| Adjusted Net Profit1 | 8.4 | 10.8 | (22%) | 27.8 | 33.7 | (18%) |
| Adjusted EPS Diluted1 | $0.71 | $0.95 | (25%) | $2.37 | $2.97 | (20%) |
| Operating Free Cash Flow1 | 11.3 | 10.2 | (11%) | 34.1 | 33.1 | 3% |
Access the full report on the Calian Financials web page.
Register for the conference call on Friday, August 11, 2023, 8:30 a.m. Eastern Time.
“Our third quarter results were mixed. While we generated 11% revenue growth, and continued to drive gross margin performance above 30%, our Adjusted EBITDA and related margin decreased due to various investments we made at the end of our last fiscal year,” said Kevin Ford, Calian Chief Executive Officer. “We believe it is prudent at this time to proactively rebalance our investment levels in certain areas of our business in order to drive a more optimal level of growth and profitability.”
“Subsequent to quarter end, we underwent a complete review of our delivery capacity and overhead costs and already started to initiate cuts in targeted areas. This restructuring plan is expected to generate annual savings of approximately $8 million once implemented. Despite these adjustments, the fundamentals of our four business segments are strong and we are confident that we can maintain our recent pace of organic growth and return to double-digit EBITDA margins in the near term. However, we have updated our FY23 guidance to reflect the weaker EBITDA performance in our third quarter,” stated Mr. Ford.
“Shortly after the quarter, we continued to make progress on our M&A agenda. We completed the acquisition of Hawaii Pacific Teleport, which will provide us with a high margin business with recurring revenue streams,” said Patrick Houston, Calian Chief Financial Officer. “We also closed a $250 million debt agreement with a lending syndicate which will give us access to additional liquidity to fuel our growth strategy.”
Third Quarter Results
Revenues increased 11%, from $150 million to $167 million, driven by growth in Health, Learning and Advanced Technologies. This growth was partially offset by a revenue decrease in the ITCS segment.
- Health: Revenues increased 23% to $49 million driven by existing customers increasing their requirements for healthcare services, as well as new programs being launched across Canada.
- Learning: Revenues grew 20% to $27 million driven by its recent investments into technology and geographical diversification. These investments are proving to be very valuable for both existing and new customers across Canada and European markets.
- Advanced Technologies: Revenues increased 14% to $45 million driven by stronger telecom product sales with existing customers and increased demand for GNSS products.
- ITCS: Revenues decreased 6% to $46 million mainly due to lower shipments in its product resale business based in the US.
Gross margin remained stable over 30% but Adjusted EBITDA and related margin decreased to $14.5 million and 8.7%, respectively, due to operating expense investments.
Liquidity and Capital Resources
Calian generated $11 million in operating free cash flows in the third quarter. The Company used its cash primarily to pay dividends, invest in capex and fund a temporary working capital need. The Company ended the quarter with net cash of $41 million, and with the new expanded credit facility put in place in July, now has total liquidity of $221 million.
Implemented a Restructuring Plan
On August 10, 2023, Calian implemented a restructuring plan to rebalance its investment levels in certain areas of its business in order to drive a more optimal level of growth and profitability. It is expected to generate annualized cost savings of approximately $8 million. Total one-time costs for implementing this restructuring are approximately $2 million. Benefits from this plan should start to materialize in Q4-23 with a full impact expected in Q1-24. See Q3-23 Management’s Discussion and Analysis (MD&A) for further details.
Completed the Acquisition of Hawaii Pacific Teleport
On August 1, 2023, Calian completed the acquisition of US-based Hawaii Pacific Teleport (HPT) for up to CAD$62M (US$46M). The acquisition marks Calian’s further move into the US following its acquisition of Computex in March 2022. It will also expand the Calian Advanced Technologies portfolio further into global markets. See press release for further details.
Debt Agreement
On July 24, 2023, Calian closed a $180 million debt facility with a lending syndicate. This new three-year term revolving credit facility includes an uncommitted accordion of $70 million for total availability of up to $250 million and replaces the existing debt facility. See press release for further details.
Quarterly Dividend
Today, Calian declared a quarterly dividend of $0.28 per share. The dividend is payable September 7, 2023, to shareholders of record as of August 24, 2023. Dividends paid by the Corporation are considered “eligible dividend” for tax purposes.
Updated Guidance
| Guidance for the year ended Sept. 30, 2023 | |||
|---|---|---|---|
| (in thousands of Canadian $) | Low | High | |
| Revenue | 630,000 | 680,000 | |
| Adjusted EBITDA | 60,000 | 65,000 | |
| Adjusted Net Profit | 36,000 | 40,000 | |
À propos de Calian
Nous faisons avancer le monde. Calian® aide les gens à communiquer, à innover, à apprendre et à mener une vie saine et sûre. Chaque jour, nos employés vivent nos valeurs d’engagement envers le client, d’intégrité, d’innovation, de respect et de travail d’équipe pour concevoir des solutions fiables qui résolvent des problèmes complexes. C’est la confiance. Ingénierie. Entreprise stable et en pleine croissance depuis 40 ans, notre siège social se trouve à Ottawa et nos bureaux et projets couvrent les marchés nord-américains, européens et internationaux. Visitez calian.com pour découvrir des solutions innovantes en matière de soins de santé, de communications, d’apprentissage et de cybersécurité.
Les noms de produits ou de services mentionnés dans le présent document peuvent être des marques déposées de leurs propriétaires respectifs.
Demandes de renseignements des médias :[email protected] 613-599-8600 x 2298 Relations avec les investisseursinquiries:[email protected]
CLAUSE DE NON-RESPONSABILITÉ
Certaines informations contenues dans le présent communiqué de presse sont de nature prospective et sont soumises à des risques et incertitudes importants. Les résultats ou événements prévus dans ces déclarations peuvent différer matériellement des résultats ou événements réels. Ces déclarations sont généralement accompagnées de termes tels que “avoir l’intention”, “anticiper”, “croire”, “estimer”, “s’attendre à” ou d’autres termes similaires. Les facteurs susceptibles d’entraîner des résultats ou des événements différents des attentes actuelles comprennent, entre autres : l’impact de la concurrence sur les prix ; la rareté des professionnels qualifiés ; l’impact de l’évolution rapide des technologies et des marchés ; la perte d’activité ou le risque de crédit avec les principaux clients ; les risques techniques sur les projets à prix fixe ; les conditions générales du secteur et du marché et les taux de croissance ; la croissance internationale et les conditions économiques mondiales, y compris les fluctuations des taux de change ; et l’impact des consolidations dans l’industrie des services aux entreprises. Pour de plus amples informations concernant certains de ces facteurs et d’autres, veuillez consulter le dernier rapport annuel de la société et les autres rapports déposés par Calian auprès de la Commission des valeurs mobilières de l’Ontario. Calian décline toute intention ou obligation de mettre à jour ou de réviser les déclarations prévisionnelles, que ce soit en raison de nouvelles informations, d’événements futurs ou autres. Rien ne garantit que les résultats, performances ou réalisations réels exprimés ou sous-entendus dans les déclarations prospectives contenues dans la présente communication se produiront ou, s’ils se produisent, que des avantages pourront en être tirés.
Calian – Siège social – 770 Palladium Drive – Ottawa – Ontario – Canada – K2V 1C8
Tel : 613.599.8600 – Fax : 613-592-3664 – General info email : [email protected]
About Calian
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:
613-599-8600 x 2298
Investor Relations inquiries:
—————————————————————————–
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: [email protected]
