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Calian Reports Record Results for the Fourth Quarter and FY24

(All amounts in release are in Canadian dollars)

OTTAWA, Ontario, Nov. 26, 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 fourth quarter and FY24 ended September 30, 2024.

Highlights of Q4-24:

  • Revenue up 3% to $181 million
  • Gross margin at 35.3%, up from 31.7% last year
  • Adjusted EBITDA1 of $23 million (margin of 12.5%) an increase of 11% from the prior year
  • Announced collaborations with Microsoft and Walmart Canada

Highlights of record performance in FY24:

  • Revenue up 13% to $747 million
  • Gross margin at 34.0%, up from 31.0% last year
  • Adjusted EBITDA1 at $86 million, up 30% from last year
  • Operating free cash flow1 of $58 million, up from $45 million last year
  • Net debt to adjusted EBITDA1 ratio of 0.4x
  • Repurchased 115,248 shares in consideration of $6 million
       
Financial HighlightsThree months endedYear ended
(in millions of $, except per share & margins)September 30,September 30,
 20242023%20242023%
Revenue181.2 175.9 3%746.6 658.6 13%
Adjusted EBITDA122.7 20.4 11%85.5 66.0 30%
Adjusted EBITDA %112.5%11.6%90bps11.5%10.0%150bps
Adjusted Net Profit111.5 12.7 (10) %51.7 40.5 28%
Adjusted EPS Diluted10.96 1.07 (11) %4.33 3.45 26%
Operating Free Cash Flow116.3 10.7 52%58.2 44.8 30%
       
       

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 video webcast on Tuesday, November 26, 2024, 8:30 a.m. Eastern Time.

“We capped off FY24 with a record quarter,” said Kevin Ford, Calian CEO. “Revenues, gross margin and adjusted EBITDA all hit historical highs for the fourth quarter and the full year. During the year, we completed three strategic acquisitions, signed and acquired contracts valued at $785 million and expanded our product and service offering in new markets. We finished the year with revenues and adjusted EBITDA up 13% and 30%, respectively, on track with our three-year strategic plan of doubling our Adjusted EBITDA1 by the end of FY26. With tailwinds in our growth markets, a solid balance sheet and a strong pipeline of acquisitions, we are on track to achieve another record year in FY25,” stated Mr. Ford.

FY24 Results

Revenues increased 13%, from $659 million to $747 million. This represents the highest revenue for the Company on record and the 7th consecutive year of double-digit growth. Acquisitive growth was 11% and was generated by the acquisitions of Hawaii Pacific Teleport (“HPT”), Decisive Group, the nuclear assets from MDA Ltd and Mabway. Organic growth was 2% and was driven by double-digit growth in the Health segment.

Gross margin reached 34.0% and represents the highest annual gross margin for the Company on record. Adjusted EBITDA1 reached $86 million, up 30% from $66 million last year, driven by the higher margin contribution from acquisitions and increased product revenue. Adjusted EBITDA1 margin reached 11.5%, up from 10.0% last year, as a result of a favorable revenue mix and increased volume.

Net profit reached $11 million, or $0.93 per diluted share, down from $19 million, or $1.61 per diluted share last year. This decrease in profitability is primarily due to increased amortization and interest expenses related to acquisitions, partially offset by higher adjusted EBITDA1. Adjusted net profit1 reached $52 million, or $4.33 per diluted share, up from $40 million, or $3.45 per diluted share last year.

Liquidity and Capital Resources

“In FY24 we generated $58 million in operating free cash flow1, representing a 68% conversion rate from adjusted EBITDA1,” said Patrick Houston, Calian CFO. “We used our cash and a portion of our credit facility to invest in our business with the acquisitions of Decisive Group, the nuclear assets from MDA and Mabway, coupled with earn-outs for $88 million and capital expenditures of $12 million. We also provided a return to shareholders in the form of dividends of $13 million and share buybacks of $6 million. We ended the year with a net debt to adjusted EBITDA1 ratio of 0.4x, well-positioned to pursue our growth objectives,” concluded Mr. Houston.

Normal Course Issuer Bid

On August 28, 2024, the TSX accepted Calian’s Notice of Intention to Make a Normal Course Issuer Bid (“NCIB”) to purchase for cancellation up to 995,904 common shares during the 12-month period commencing September 1, 2024 and ending August 31, 2025, representing approximately 10% of the public float of its common shares as at August 16, 2024.

On August 30, 2023, the TSX accepted Calian’s Notice of Intention to Make a NCIB to purchase for cancellation up to 1,044,012 common shares during the 12-month period commencing September 1, 2023 and ending August 31, 2024, representing approximately 10% of the public float of its common shares as at August 22, 2023.

In the three-month period ended September 30, 2024, the Company repurchased 61,422 shares for cancellation in consideration of $3 million. For the twelve-month period ended September 30, 2024, the Company repurchased 115,248 shares for cancellation in consideration of $6 million.

Announced Collaborations with Microsoft and Walmart Canada

On October 1, 2024, Calian announced it agreed to collaborate with Walmart Canada to expand the retailer's specialty pharmacy capabilities through licensing Calian's custom-built digital health platform NexiTM.

On September 27, 2024, Calian announced a collaboration with Microsoft to offer scalable cloud-native cybersecurity solutions through the adoption of Microsoft Sentinel.

Quarterly Dividend

On November 25, 2024, Calian declared a quarterly dividend of $0.28 per share. The dividend is payable December 23, 2024, to shareholders of record as of December 9, 2024. Dividends paid by the Company are considered “eligible dividend” for tax purposes.

Guidance

Aligning with industry practice, the Company has decided to change its definition of adjusted EBITDA1 starting in FY25. The table below reconciles the previously reported definition of adjusted EBITDA1 for fiscal years 2023 and 2024 to the new definition of adjusted EBITDA1 that will be used going forward. The new definition of adjusted EBITDA1 adds back stock based compensation expense as well as one-time integration/M&A costs.

(in thousands of $)FY2024 FY2023 
Adj. EBITDA (previously reported)85,535 66,548 
Stock based compensation expense4,373 3,870 
Integration/M&A costs2,251 545 
Adj. EBITDA (going forward)92,159 70,963 
     


The table below presents the FY25 guidance based on the new definition of adjusted EBITDA.

 Guidance for the year ended September 30, 2025FY24 ResultsYOY Growth at
Midpoint
(in thousands of $)LowMidpointHigh
Revenue800,000840,000880,000746,61112%
Adj. EBITDA196,000101,000106,00092,15910%
      


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.

Calian Adopts an Advance Notice By-law and Amends and Restates its Operating By-law

Calian Group Ltd. (“Calian” or the “Company”) announces the adoption by its board of directors (the “Board”) of an advance notice by-law (the “Advance Notice By-law”) and an amended and restated operating by-law (the “Operating By-law”).

The Advance Notice By-law establishes procedures for shareholders giving advance notice to the Company of nominations for directors at any meeting of shareholders where directors are being elected in order to facilitate an orderly and efficient meeting process and allow all shareholders a reasonable opportunity to evaluate all proposed nominees and make an informed voting decision. The Advance Notice By-law is similar to the advance notice by-laws adopted by many other Canadian companies.

Under the Advance Notice By-law, shareholders seeking to nominate a candidate for a Board seat are generally required to provide notice to the Company in the event of:

  1. an annual meeting of the shareholders, not less than 30 days before the date of the meeting, or 40 days before if the Company uses notice-and-access provisions under National Instrument 54-101 -Communication with Beneficial Owners of Securities of a Reporting Issuer for delivery of proxy related materials; or
  2. a special meeting where directors are being elected, not later than the close of business on the 15th day after the announcement of the meeting.

As the Operating By-law was initially adopted in 2002, it has been amended and restated to align with current laws and governance practices. The amendments include, among other things, to allow the Chief Executive Officer to delegate signing authority, to remove deviations from the Canada Business Corporations Act with respect to conflicts of interest and the inspection of corporate records, to remove the discretion for the board to revise the quorum for a meeting of the directors, to allow the board to appoint from among its members its chair, to reflect the current committees, to remove reference to specific officer duties and powers and to clarify the term of office, to allow for dividends to be paid electronically, to allow the board to call for a shareholder meeting by entirely electronic means only if there is a compelling reason to not hold the meeting in person, to allow the board discretion to accept proxies after the deadline, and to increase the quorum for a meeting of the shareholders to two persons present and holding or representing by proxy at least 25% of the votes attached to all shares entitled to vote at the meeting. 

In accordance with the Canada Business Corporations Act, both the Operating By-law and the Advance Notice By-law are currently in effect and the Company will submit them to the shareholders at the next annual meeting. Provided the shareholders confirm the Operating By-law and the Advance Notice By-law at the meeting, each will continue in effect in the form it was confirmed.

The foregoing descriptions are only summaries and copies of the Operating By-law and Advance Notice By-law have been filed under the Company’s profile on SEDAR+ at www.sedarplus.ca.

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:
media@calian.com
613-599-8600

Investor Relations inquiries:
ir@calian.com

-----------------------------------------------------------------------------
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.
AUDITED ANNUAL CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
As at September 30, 2024 and 2023
(Canadian dollars in thousands, except per share data)
        
 September 30, September 30,
 2024 2023
ASSETS       
CURRENT ASSETS       
Cash and cash equivalents$51,788  $33,734 
Accounts receivable 157,376   173,052 
Work in process 20,437   16,580 
Inventory 23,199   21,983 
Prepaid expenses 23,978   19,040 
Derivative assets 32   155 
Total current assets 276,810   264,544 
NON-CURRENT ASSETS       
Property, plant and equipment 40,962   37,223 
Right of use assets 36,383   34,637 
Prepaid expenses 7,820   10,386 
Deferred tax asset 3,425   967 
Investments 3,875   3,673 
Acquired intangible assets 128,253   75,160 
Goodwill 210,392   159,133 
Total non-current assets 431,110   321,179 
TOTAL ASSETS$707,920  $585,723 
LIABILITIES AND SHAREHOLDERS’ EQUITY       
CURRENT LIABILITIES       
Debt facility$  $37,750 
Accounts payable and accrued liabilities 124,884   105,550 
Provisions 3,075   2,848 
Unearned contract revenue 41,723   32,423 
Lease obligations 5,645   4,949 
Contingent earn-out 39,136   11,263 
Derivative liabilities 92   353 
Total current liabilities 214,555   195,136 
NON-CURRENT LIABILITIES       
Debt facility 89,750    
Lease obligations 33,798   32,057 
Unearned contract revenue 14,503   15,592 
Contingent earn-out 2,697   2,535 
Deferred tax liabilities 25,862   12,031 
Total non-current liabilities 166,610   62,215 
TOTAL LIABILITIES 381,165   257,351 
        
SHAREHOLDERS’ EQUITY       
Issued capital 225,747   225,540 
Contributed surplus 6,019   4,856 
Retained earnings 91,268   96,859 
Accumulated other comprehensive income (loss) 3,721   1,117 
TOTAL SHAREHOLDERS’ EQUITY 326,755   328,372 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY$707,920  $585,723 
Number of common shares issued and outstanding 11,802,364   11,812,650 


CALIAN GROUP LTD.
AUDITED ANNUAL CONDENSED CONSOLIDATED STATEMENTS OF NET PROFIT
For the three and twelve month periods ended September 30, 2024 and 2023
(Canadian dollars in thousands, except per share data)
        
 Three months ended Year ended
 September 30, September 30,
 2024
 2023
 2024
 2023
Revenue$181,166  $175,948  $746,611  $658,583 
Cost of revenues 117,242   120,152   492,597   454,371 
Gross profit 63,924   55,796   254,014   204,212 
        
Selling and marketing 13,466   10,545   55,115   45,410 
General and administration 24,734   22,034   101,397   81,363 
Research and development 3,047   2,836   11,967   11,452 
Profit before under noted items 22,677   20,381   85,535   65,987 
        
Depreciation of property, plant and equipment 2,750   2,133   10,048   9,043 
Depreciation of right of use assets 1,587   1,352   6,043   4,501 
Amortization of acquired intangible assets 7,577   4,460   25,738   14,874 
Restructuring expense 368   2,618   1,864   2,618 
Other changes in fair value (202)  (314)  (202)  (314)
Deemed compensation 1,797   403   4,322   550 
Changes in fair value related to contingent earn-out 2,495   416   8,767   3,858 
Profit before interest income and income tax expense 6,305   9,313   28,955   30,857 
        
Interest expense 1,988   793   6,635   896 
Income tax expense - current 4,623   3,776   15,442   12,919 
Income tax expense (recovery) - deferred 262   (375)  (4,302)  (1,843)
NET PROFIT$(568) $5,119  $11,180  $18,885 
        
Net profit per share:       
Basic$(0.05) $0.43  $0.95  $1.61 
Diluted$(0.05) $0.43  $0.93  $1.61 


CALIAN GROUP LTD.
AUDITED ANNUAL CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three and twelve month periods ended ended September 30, 2024 and 2023
 (Canadian dollars in thousands)
            
 Three months ended Year ended
 September 30, September 30,
 2024 2023 2024 2023
CASH FLOWS GENERATED FROM (USED IN) OPERATING ACTIVITIES           
Net profit$(568) $5,119  $11,180  $18,885 
Items not affecting cash:           
Interest expense 1,410   634   4,826   365 
Changes in fair value related to contingent earn-out 2,495   416   8,767   3,858 
Lease obligations interest expense 578   159   1,809   531 
Income tax expense 4,885   3,401   11,140   11,076 
Employee share purchase plan expense 122   130   549   597 
Share based compensation expense 562   1,618   3,824   3,273 
Depreciation and amortization 11,914   7,945   41,829   28,418 
Deemed compensation 1,797   403   4,322   550 
Other changes in fair value (202)  (314)  (202)  (314)
  22,993   19,511   88,044   67,239 
Change in non-cash working capital           
Accounts receivable (9,631)  (8,971)  17,625   1,393 
Work in process (1,123)  6,166   (2,509)  23,285 
Prepaid expenses and other 3,007   (3,849)  337   (829)
Inventory 1,002   1,873   2,795   (3,340)
Accounts payable and accrued liabilities 9,133   9,476   (1,064)  (17,947)
Unearned contract revenue (1,687)  4,918   (6)  928 
  23,694   29,124   105,222   70,729 
Interest paid (1,988)  (791)  (6,635)  (895)
Income tax paid (2,289)  (5,629)  (11,366)  (13,059)
  19,417   22,704   87,221   56,775 
CASH FLOWS GENERATED FROM (USED IN) FINANCING ACTIVITIES           
Issuance of common shares net of costs 618   760   2,786   2,901 
Dividends (3,397)  (3,335)  (13,351)  (13,163)
Draw on debt facility (4,250)  37,750   52,000   30,250 
Payment of lease obligations (1,318)  (1,261)  (5,289)  (4,382)
Repurchase of common shares (2,819)  (1,670)  (5,648)  (1,670)
  (11,166)  32,244   30,498   13,936 
CASH FLOWS USED IN INVESTING ACTIVITIES           
Investments          (2,689)
Business acquisitions    (59,834)  (87,862)  (68,494)
Property, plant and equipment (2,462)  (2,368)  (11,803)  (8,440)
  (2,462)  (62,202)  (99,665)  (79,623)
            
NET CASH INFLOW (OUTFLOW)$5,789  $(7,254) $18,054  $(8,912)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 45,999   40,988   33,734   42,646 
CASH AND CASH EQUIVALENTS, END OF PERIOD$51,788  $33,734  $51,788  $33,734 


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  Year ended
   September 30,  September 30,
  2024
 2023
 2024
 2023
Net profit $(568) $5,119  $11,180  $18,885 
Depreciation of equipment and application software  2,750   2,133   10,048   9,043 
Depreciation of right of use asset  1,587   1,352   6,043   4,501 
Amortization of acquired intangible assets  7,577   4,460   25,738   14,874 
Restructuring expense  368   2,618   1,864   2,618 
Other changes in fair value  (202)  (314)  (202)  (314)
Interest expense  1,988   793   6,635   896 
Changes in fair value related to contingent earn-out  2,495   416   8,767   3,858 
Deemed Compensation  1,797   403   4,322   550 
Income tax  4,885   3,401   11,140   11,076 
Adjusted EBITDA $22,677  $20,381  $85,535  $65,987 


Adjusted Net Profit and Adjusted EPS

 
   Three months ended  Year ended
   September 30,  September 30,
  2024
 2023
 2024
 2023
Net profit $(568) $5,119  $11,180  $18,885 
Restructuring expense  368   2,618   1,864   2,618 
Other changes in fair value  (202)  (314)  (202)  (314)
Changes in fair value related to contingent earn-out  2,495   416   8,767   3,858 
Deemed Compensation  1,797   403   4,322   550 
Amortization of intangibles  7,577   4,460   25,738   14,874 
Adjusted net profit  11,467   12,702   51,669   40,471 
Weighted average number of common shares basic  11,835,037   11,790,964   11,837,520   11,714,887 
Adjusted EPS Basic  0.97   1.08   4.36   3.45 
Adjusted EPS Diluted $0.96  $1.07  $4.33  $3.45 


Operating Free Cash Flow

 
   Three months ended  Year ended
   September 30,  September 30,
  2024 2023 2024 2023
Cash flows generated from operating activities $19,417  $22,704  $87,221  $56,775 
Property, plant and equipment  (2,462)  (2,368)  (11,803)  (8,440)
Free cash flow $16,955  $20,336  $75,418  $48,335 
             
Free cash flow $16,955  $20,336  $75,418  $48,335 
Adjustments:            
Change in non-cash working capital  (701)  (9,613)  (17,178)  (3,490)
Operating free cash flow $16,254  $10,723  $58,240  $44,845 
Operating free cash flow per share - basic  1.37   0.91   4.92   3.83 
Operating free cash flow per share - diluted  1.35   0.91   4.86   3.81 
Operating free cash flow conversion  72%  53%  68%  68%


Net Debt to Adjusted EBITDA

 
  September 30, September 30,
  2024 2023
Cash $51,788  $33,734 
Debt facility  89,750   37,750 
Net debt (net cash)  37,962   4,016 
Trailing twelve month adjusted EBITDA  85,535   65,987 
Net debt to adjusted EBITDA  0.4   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.


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