Mr. Kevin Ford reports

CALIAN REPORTS UNAUDITED RESULTS FOR THE FOURTH QUARTER AND FY23

Calian Group Ltd. today released its unaudited results for the fourth quarter and FY23 (fiscal 2023) ended Sept. 30, 2023.

Highlights of record performance in Q4:

• Revenue up 10 per cent to $176-million;
• Gross margin at 31.7 per cent, above 30 per cent for the sixth consecutive quarter;
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) at $20-million, up 7 per cent.

Highlights of FY23:

• Revenue up 13 per cent to $659-million;
• Gross margin at 31.0 per cent, up from 29.1 per cent last year;
• Adjusted EBITDA at $66-million, in line with last year;
• Operating free cash flow of $45-million;
• Net liquidity of $176-million;
• Repurchased 32,094 shares for consideration of $1.7-million;
• Acquired Hawaii Pacific Teleport on Aug. 1, 2023;
• Appointed president, IT and cyber solutions;
• Entered definitive purchase agreement to acquire Decisive Group.

The company will file the audited financial statements and annual report in early December, 2023.

Access the full report on the Calian website.

Register for the conference call on Tuesday, Nov. 28, 2023, 8:30 a.m. Eastern Time.

"We finished the year with a record quarter as revenues, gross margin and adjusted EBITDA reached new historical highs," said Kevin Ford, Calian chief executive officer. "In FY23 we generated double-digit revenue growth with all four segments contributing. Our adjusted EBITDA remained flat. With two recent acquisitions and adjustments in our operating costs, we are poised to see continued increase in our profitability.

"Given the ongoing robust demand for our products and services, the contribution from recent acquisitions and the benefits from our restructuring plan, we are confident in our ability to post another record year. At the midpoint of our guidance range this translates into revenue and adjusted EBITDA growth of 15 per cent and 32 per cent, respectively, over FY23," concluded Mr. Ford.

Fourth quarter results

Revenues increased 10 per cent, from $161-million to $176-million, driven by double-digit growth in advanced technologies, health and learning.

• Advanced technologies: Revenues increased 72 per cent to $53-million driven by product sales, the contribution from the Hawaii Pacific Teleport acquisition and the unwinding of backlog due to ongoing easing of supply chains.
• Health: Revenues increased 31 per cent to $52-million driven by significantly increased demand with the company's long-standing customers as well as short-term health response demand.
• Learning: Revenues grew 11 per cent to $24-million driven by strong demand for military training with existing Canadian customers as well as demand for new products and technologies for NATO customers due to geopolitical issues and renewed focus on readiness.
• ITCS: Revenues decreased 31 per cent to $48-million as expected, mainly due to lower shipments in its product resale business based in the United States, as the fourth quarter last year saw a disproportionate amount of product shipments due to the easing of supply chain issues.

Gross margin reached a record 31.7 per cent, representing its sixth consecutive quarter above 30 per cent. Adjusted EBITDA reached a record $20-million and adjusted EBITDA margin returned to double digits from Q3 levels to reach 11.6 per cent.

Liquidity and capital resources

"In FY23 we generated $45-million in operating free cash flow, representing a 68-per-cent conversion rate from adjusted EBITDA," said Patrick Houston, Calian chief financial officer. "We continued to have a disciplined approach to capital deployment with the view of maximizing return on investments. We used our cash to invest in the business with acquisitions and earnout payments of $68-million and capex of $8-million and provide a return to shareholders in the form of dividends of $13-million and share buybacks of $2-million. We ended the year with $176-million in net liquidity, well positioned to pursue our growth objectives," concluded Mr. Houston.

Normal course issuer bid

In the three-month period ended Sept. 30, 2023, as part of its normal course issuer bid, the company repurchased 32,094 shares for cancellation in consideration of $1.7-million. Since the launch of the normal course issuer bid on Sept. 1, 2023, the company repurchased 59,320 common shares for cancellation in consideration of $3.0-million.

Entered into a definitive purchase agreement to acquire Decisive Group

On Nov. 9, 2023, Calian entered into a definitive purchase agreement to acquire 100 per cent of the shares of Ottawa-based Decisive Group Inc. for up to $74.7-million. This includes the amount to be paid in cash at closing of $50.0-million. The definitive purchase agreement is effective immediately. Calian anticipates the transaction to close on Dec. 1, 2023.

Appointed president, IT and cyber solutions

On Nov. 6, 2023, Calian appointed Michael Tremblay to the position of president, IT and cyber solutions, effective Dec. 1, 2023. With 38 years of sales, marketing, operations, general management experience, coupled with considerable knowledge of public sector clients, Mr. Tremblay has held senior executive positions with Microsoft, SAP, Fujitsu Consulting, JDS Uniphase, EDS Systemhouse and Digital Equipment Corp.

Quarterly dividend

Today, Calian declared a quarterly dividend of 28 cents per share. The dividend is payable Dec. 27, 2023, to shareholders of record as of Dec. 11, 2023. Dividends paid by the corporation are considered eligible dividend for tax purposes.

This guidance includes the full-year contribution from the Hawaii Pacific Teleport acquisition and assumes the closing of the Decisive Group acquisition on Dec. 1, 2023. It also includes the benefits from the restructuring plan announced in August, 2023.

About Calian Group Ltd.

The company keeps the world moving forward. Calian helps people communicate, innovate, learn and lead safe and healthy lives. Every day, Calian's employees live the company'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, the company is headquartered in Ottawa with offices and projects spanning North American, European and international markets.

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