Mr. Kevin Ford reports

CALIAN REPORTS THIRD QUARTER RESULTS

Calian Group Ltd. has released its results for the third quarter ended June 30, 2023.

Third quarter highlights:

• Revenue up 11 per cent to $167-million;
• Gross margin above 30 per cent for the fifth consecutive quarter;
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) at $15-million, down 10 per cent compared with third quarter 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 Aug. 1, 2023;
• Closed $250-million debt agreement on July 24, 2023;
• Implemented restructuring plan for annualized savings of $8-million;
• Updated fiscal 2023 guidance.

Register for the conference call on Friday, Aug. 11, 2023, at 8:30 a.m. Eastern Time.

"Our third quarter results were mixed. While we generated 11-per-cent revenue growth and continued to drive gross margin performance above 30 per cent, 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 pro-actively 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 fiscal 2023 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 [merger-and-acquisition] 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."

Quarterly dividend

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

Updated guidance

"We are updating our FY 2023 guidance in light of our third quarter results. Although we have a strong order book for our fourth quarter, the range reflects the timing of deliveries of products in our advanced technologies and ITCS segments," said Mr. Ford. "The cost reduction measures we have taken will restore EBITDA levels in line with recent performance levels as we enter FY 2024. This along with our organic growth momentum, the recent acquisition of Hawaii Pacific Teleport and our M&A pipeline gives us confidence that we are still on pace to post strong results in the short term and achieve our longer-term target of reaching $1-billion in revenue in FY 2026," said Mr. Ford.

About Calian Group Ltd.

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

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