Mr. Kevin Ford reports

CALIAN REPORTS RESULTS FOR THE FIRST QUARTER

Calian Group Ltd. has released its results for the first quarter ended Dec. 31, 2023.

Q1 2024 highlights:

• Revenue up 21 per cent to $179-million;
• Gross margin at 32.5 per cent, up from 30.6 per cent last year;
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) up 37 per cent to $19.5-million;
• Operating free cash flow of $14.2-million;
• Net liquidity of $139-million;
• Repurchased 27,226 shares in consideration of $1.4-million;
• Guidance reiterated;
• Appointed president, IT (information technology) and cyber solutions;
• Completed the acquisition of Decisive Group.

"We had a strong start to the year with revenues up 21 per cent, driven by double-digit organic growth and the strong contribution from recent acquisitions," said Kevin Ford, chief executive officer of Calian. "Steps to restore our efficiency are bearing fruit with gross margin at an all-time high and adjusted EBITDA margin bordering on 11 per cent. These results demonstrate the strength of our business model, our diversification into new markets and offerings, as well as the value creation generated from our M&A [merger and acquisition] agenda. With our guidance reiterated, we are on track to deliver another record year and one step closer to our objective of reaching $1-billion by the end of [fiscal 2026]," stated Mr. Ford.

First quarter results

Revenues increased 21 per cent, from $148-million to $179-million, driven by growth across all four segments, including double-digit growth in health, ITCS and advanced technologies. Acquisitive growth was 9 per cent and was generated by the acquisitions of Hawaii Pacific Teleport (HPT) and Decisive. Organic growth was 12 per cent and was driven by double-digit growth in health and advanced technologies.

Gross margin reached a record 32.5 per cent, representing its seventh consecutive quarter above 30 per cent. Adjusted EBITDA reached $19.5-million, up 37 per cent over the same period last year, driven by strong overall revenue growth and margin expansion in advanced technologies and health as well as from the benefits generated from the restructuring plan implemented midway through the fourth quarter. Adjusted EBITDA margin reached 10.9 per cent, up from 9.7 per cent in the same period last year as a result of a favourable revenue mix.

Net profit reached $5.5-million, or 46 cents per diluted share, up from $4.6-million, or 39 cents per diluted share for the same period last year.

Liquidity and capital resources

"In the first quarter, we generated $14.2-million in operating free cash flow, representing a 73-per-cent conversion rate from adjusted EBITDA," said Patrick Houston, chief financial officer of Calian. "We used our cash and drew on our credit line primarily to invest in our business with the acquisition of Decisive for $47-million and capital expenditures of $2-million. We also provided a return to shareholders in the form of dividends of $3-million and share buybacks of $1-million. We ended the quarter with $139-million in net liquidity, well positioned to pursue our growth objectives," concluded Mr. Houston.

Normal course issuer bid

In the three-month period ended Dec. 31, 2023, as part of its normal course issuer bid, the company repurchased 27,226 shares for cancellation in consideration of $1.4-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-million.

Quarterly dividend

Today, Calian declared a quarterly dividend of 28 cents per share. The dividend is payable March 13, 2024, to shareholders of record as of Feb. 28, 2024. Dividends paid by the corporation are considered eligible dividends for tax purposes.

This guidance does not include any 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.

Management update

Recently, Patrick Thera, president, advanced technologies, informed Calian that he will be retiring after a 38-year career with SED Systems and Calian. "Patrick played a pivotal role in shaping the success of the advanced technologies segment. I am immensely grateful for his dedication, sage counsel and commitment to the business. He will remain at the helm of the segment while we conduct a search for his successor and provide a smooth transition," 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, respect 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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