Mr. Kevin Ford reports

CALIAN REPORTS RECORD REVENUE FOR THE SECOND QUARTER

Calian Group Ltd. today released its results for the second quarter ended March 31, 2023.

Second quarter highlights:

• Revenue up 19 per cent to $169-million;
• Gross margin above 30 per cent for the fourth consecutive quarter;
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) at $17-million, in line with Q2 last year;
• Operating free cash flow of $11-million;
• Cash on hand of $46-million and net liquidity of $126-million;
• New contract signings of $147-million;
• Entered into a definitive purchase agreement to acquire United States satellite communications provider Hawaii Pacific Teleport;
• Reiterated fiscal 2023 guidance.

Register for the conference call on Thursday, May 11, 2023, 8:30 a.m. Eastern Time.

"We closed another record quarter, generating double-digit revenue growth of 19 per cent with contributions from both organic and acquisitions, in line with our strategic objectives," said Kevin Ford, Calian chief executive officer. "We continued to invest in our long-term growth and execute our M&A strategy with the announcement that we entered into a definitive purchase agreement to acquire the assets of U.S.-based Hawaii Pacific Teleport. With a stronger second half of the year expected, we remain confident in our ability to post our sixth consecutive record year."

"We continued to drive gross margin performance above 30 per cent for the fourth consecutive quarter," said Patrick Houston, Calian chief financial officer. "While our adjusted EBITDA was the highest second quarter on record, our margin was down due to inflationary pressures and ongoing investments in growth and delivery capacity. These investments will help position us to capitalize on our long-term growth objectives."

Second quarter results

Revenues increased 19 per cent, from $142-million to $169-million, driven by double-digit growth in information technology and cyber solutions (ITCS), advanced technologies, and learning segments.

• ITCS: Revenues increased 53 per cent to $49-million mainly driven by the company's strong performance from its expansion into the United States with the acquisition of Computex last March.
• Learning: Revenues grew 16 per cent to $29-million driven by its organic growth initiatives, including business development, research and development of software tools, and further international expansion, which increased customer share of wallet and attracted new customers.
• Advanced technologies: Revenues increased 18 per cent to $47-million driven by the ramping up of ground systems projects, coupled with increased demand for GNSS products and ag tech product deliveries.
• Health: Revenues decreased 4 per cent to $44-million due to lower COVID-19-related business which declined 19 per cent year over year, partially offset by higher demand generated from the mainstay health services and contract research organization services.

Liquidity and capital resources

Calian generated $11-million in operating free cash flows in the second quarter. The company used its cash primarily to pay debt, earnouts on past acquisitions and dividends. The company ended the quarter with net cash of $46-million and an available credit facility resulting in total available liquidity of $126-million.

Purchase agreement to acquire Hawaii Pacific Teleport

On March 9, 2023, the company announced it entered into a definitive purchase agreement to acquire the assets of United States-based Hawaii Pacific Teleport for up to $62-million ($46-million (U.S.)). Completion of this transaction is subject to United States regulatory approvals and other customary closing conditions. Calian anticipates the transaction to close in the second half of fiscal year 2023.

Management departure

Today, Calian announced the resignation of Sacha Gera, president IT and cyber solutions (ITCS), who has decided to pursue a leadership role with a local software company. Mr. Gera will remain with the company until the end of May. "Sacha has been a key part of the Calian senior leadership team and has made significant contributions to the growth and success of our company over these past two years," said Mr. Ford, Calian CEO. "He has built a strong leadership team within our ITCS segment that will ensure the continuity of our day-to-day operations and maintain our momentum in both Canada and the United States. I want to thank him for all of his support and wish him all the best in his future endeavours."

Quarterly dividend

Today, Calian declared a quarterly dividend of 28 cents per share. The dividend is payable June 7, 2023, to shareholders of record as of May 24, 2023. Dividends paid by the corporation are considered eligible dividend for tax purposes.

Guidance reiterated

"With new contract signings of $147-million, a robust backlog of $1.2-billion combined with increased recurring revenue streams, we are on pace to deliver another record year in FY23," said Mr. Ford.

About Calian Group Ltd.

Calian helps people communicate, innovate, learn, and lead safe and healthy lives. Every day, the company's employees live Calian's values of customer commitment, integrity, innovation and teamwork to engineer reliable solutions that solve complex problems. That is confidence, engineered. A stable and growing 40-year company, Calian is headquartered in Ottawa with offices and projects spanning North American, European and international markets.

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