Calian Reports Unaudited Results for the Fourth Quarter and

(All amounts in release are in Canadian dollars)

OTTAWA, Nov. 27, 2023 (GLOBE NEWSWIRE) -- Calian® Group Ltd. (TSX:CGY), a diverse products and services company providing innovative healthcare, communications, learning and cybersecurity solutions, today released its unaudited results for the fourth quarter and FY23 ended September 30, 2023.

Highlights of record performance in Q4:

Revenue up 10% to $176 million
Gross margin at 31.7%, above 30% for the sixth consecutive quarter
Adjusted EBITDA¹ at $20 million, up 7%

Highlights of FY23:

Revenue up 13% to $659 million
Gross margin at 31.0%, up from 29.1% last year
Adjusted EBITDA¹ 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 August 1^st, 2023
Appointed President, IT & 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.


Financial Highlights	Unaudited Three months ended								Unaudited Twelve months ended
(in millions of $, except per share & margins)	September 30,								September 30,
	2023			2022				%	2023			2022				%
Revenue		175.9			160.6		10	%		658.6			582.2		13	%
Adjusted EBITDA¹		20.4			19.1		7	%		66.0			65.9		-	%
Adjusted EBITDA %¹		11.6	%		11.8	%	(20	bps)		10.0	%		11.3	%	(130	bps)
Net Profit		5.1			1.2		328	%		18.8			13.6		39	%
EPS Diluted	$	0.43		$	0.10		330	%	$	1.61		$	1.19		35	%
Adjusted Net Profit¹		12.7			10.3		24	%		40.4			44.0		(8	%)
Adjusted EPS Diluted¹	$	1.07		$	0.90		20	%	$	3.45		$	3.87		(11	%)
Operating Free Cash Flow¹		10.7			14.1		(24	%)		44.8			47.2		(5	%)

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 conference call on Tuesday, November 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% and 32%, respectively, over FY23,” concluded Mr. Ford.

Fourth Quarter Results

Revenues increased 10%, from $161 million to $176 million, driven by double-digit growth in Advanced Technologies, Health and Learning.

Advanced Technologies: Revenues increased 72% 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% to $52 million driven by significantly increased demand with our long-standing customers as well as short-term health response demand.
Learning: Revenues grew 11% 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 geo-political issues and renewed focus on readiness.
ITCS: Revenues decreased 31% to $48 million as expected, mainly due to lower shipments in its product resale business based in the U.S., 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%, representing its 6^th consecutive quarter above 30%. Adjusted EBITDA reached a record $20 million and adjusted EBITDA margin returned to double digits from Q3 levels to reach 11.6%.

Liquidity and Capital Resources

“In FY23 we generated $45 million in operating free cash flow, representing a 68% conversion rate from adjusted EBITDA,” said Patrick Houston, Calian CFO. “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 September 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 September 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 November 9, 2023, Calian entered into a definitive purchase agreement to acquire 100% of the shares of Ottawa-based Decisive Group Inc. for up to CAD$74.7 million. This includes the amount to be paid in cash at closing of CAD$50.0 million. The definitive purchase agreement is effective immediately. Calian anticipates the transaction to close on December 1, 2023. See press release for further details.

Appointed President, IT and Cyber Solutions

On November 6, 2023, Calian appointed Michael Tremblay to the position of President, IT and Cyber Solutions effective December 1, 2023. With 38 years of sales, marketing, operations, general management experience, coupled with considerable knowledge of public sector clients, Mike has held senior executive positions with Microsoft, SAP, Fujitsu Consulting, JDS Uniphase, EDS Systemhouse and Digital Equipment Corporation. See press release for further details.

Quarterly Dividend

Today, Calian declared a quarterly dividend of $0.28 per share. The dividend is payable December 27, 2023, to shareholders of record as of December 11, 2023. Dividends paid by the Corporation are considered “eligible dividend” for tax purposes.

Guidance


	Guidance for the year ended Sept. 30, 2024

*(in thousands of Canadian $)*	Low	High
Revenue	730,000	790,000
Adjusted EBITDA	83,000	89,000

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

About Calian

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 and teamwork to engineer reliable solutions that solve complex problems. 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:
pr@calian.com
613-599-8600 x 2298

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.
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
As at September 30, 2023 and 2022
(Canadian dollars in thousands, except per share data)

	September 30,		September 30,
	2023		2022
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	33,734	$	42,646
Accounts receivable		173,052		171,453
Work in process		16,580		39,865
Inventory		21,983		18,643
Prepaid expenses		19,040		23,780
Derivative assets		155		123
Total current assets		264,544		296,510
NON-CURRENT ASSETS
Capitalized research and development		1,068		2,186
Equipment		26,709		16,623
Application software		9,446		10,395
Right of use assets		34,637		16,678
Investments		3,673		670
Acquired intangible assets		75,160		57,087
Prepaid expenses		10,386		-
Deferred tax asset		967		1,054
Goodwill		159,133		145,959
Total non-current assets		321,179		250,652
TOTAL ASSETS	$	585,723	$	547,162
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Debt facility	$	37,750	$	7,500
Accounts payable and accrued liabilities		105,550		126,096
Contingent earn-out		11,263		25,676
Provisions		2,848		1,249
Unearned contract revenue		32,423		46,210
Derivative liabilities		353		812
Lease obligations		4,949		4,115
Total current liabilities		195,136		211,658
NON-CURRENT LIABILITIES
Lease obligations		32,057		14,920
Contingent earn-out		2,535		2,874
Unearned contract revenue		15,592		-
Deferred tax liabilities		12,031		12,524
Total non-current liabilities		62,215		30,318
TOTAL LIABILITIES		257,351		241,976

SHAREHOLDERS’ EQUITY
Issued capital		225,540		213,277
Contributed surplus		4,856		3,479
Retained earnings		96,859		92,198
Accumulated other comprehensive income (loss)		1,117		(3,768	)
TOTAL SHAREHOLDERS’ EQUITY		328,372		305,186
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	585,723	$	547,162
Number of common shares issued and outstanding		11,812,650		11,607,391

CALIAN GROUP LTD.
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF NET PROFIT
For the three and twelve month periods ended September 30, 2023 and 2022
(Canadian dollars in thousands, except per share data)

	Three months ended						Year ended
	September 30,						September 30,
	2023			2022			2023			2022
Revenue
Advanced Technologies	$	52,521		$	30,517		$	178,363		$	150,398
Health		51,568			39,470			184,856			167,141
Learning		24,228			21,799			106,192			91,668
ITCS		47,631			68,764			189,172			172,965
Total Revenue		175,948			160,550			658,583			582,172

Cost of revenues		120,152			110,400			454,371			412,946
Gross profit		55,796			50,150			204,212			169,226

Selling and marketing		10,545			13,064			45,410			32,514
General and administration		22,034			17,004			81,363			65,408
Research and development		2,836			1,015			11,452			5,372
Profit before under noted items		20,381			19,067			65,987			65,932

Depreciation of equipment, application software and capitalized research and development		2,133			2,308			9,043			6,974
Depreciation of right of use assets		1,352			950			4,501			3,629
Amortization of acquired intangible assets		4,460			3,484			14,874			20,555
Restructuring expense		2,618			-			2,618			-
Other changes in fair value		(314	)		-			(314	)		-
Deemed compensation		403			3,314			550			4,314
Changes in fair value related to contingent earn-out		416			2,289			3,858			5,555
Profit before interest income and income tax expense		9,313			6,722			30,857			24,905

Lease obligations interest expense		159			143			531			451
Interest expense		634			7			365			295
Profit before income tax expense		8,520			6,572			29,961			24,159

Income tax expense – current		3,776			5,650			12,919			14,307
Income tax recovery – deferred		(375	)		(273	)		(1,843	)		(3,752	)
Total income tax expense		3,401			5,377			11,076			10,555
NET PROFIT	$	5,119		$	1,195		$	18,885		$	13,604

Net profit per share:
Basic	$	0.43		$	0.10		$	1.61		$	1.19
Diluted	$	0.43		$	0.10		$	1.61		$	1.19

CALIAN GROUP LTD.
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three and twelve month periods ended September 30, 2023 and 2022
(Canadian dollars in thousands)

	Three months ended						Year ended
	September 30,						September 30,
	2023			2022			2023			2022
CASH FLOWS GENERATED FROM (USED IN) OPERATING ACTIVITIES
Net profit	$	5,119		$	1,195		$	18,885		$	13,604
Items not affecting cash:
Interest expense		634			7			365			295
Changes in fair value related to contingent earn-out		416			2,289			3,858			5,555
Lease obligations interest expense		159			143			531			451
Income tax expense		3,401			5,377			11,076			10,555
Employee share purchase plan expense		130			125			597			518
Share based compensation expense		1,618			571			3,273			1,927
Depreciation and amortization		7,945			6,742			28,418			31,158
Deemed compensation		403			3,314			550			4,314
Other changes in fair value		(314	)		-			(314	)		-
		19,511			19,763			67,239			68,377
Change in non-cash working capital
Accounts receivable		(8,971	)		(41,755	)		1,393			(28,822	)
Work in process		6,166			13,785			23,285			15,444
Prepaid expenses and other		(3,848	)		(10,443	)		(829	)		(20,137	)
Inventory		1,873			681			(3,340	)		(4,340	)
Accounts payable and accrued liabilities		9,475			20,962			(17,947	)		15,142
Unearned contract revenue		4,918			403			928			11,333
		29,124			3,396			70,729			56,997
Interest paid		(791	)		(150	)		(895	)		(747	)
Income tax paid		(5,629	)		(3,258	)		(13,059	)		(13,109	)
		22,704			(12	)		56,775			43,141
CASH FLOWS GENERATED FROM (USED IN) FINANCING ACTIVITIES
Issuance of common shares net of costs		760			571			2,901			2,705
Dividends		(3,335	)		(3,249	)		(13,163	)		(12,765	)
Draw (repayment) on debt facility		37,750			-			30,250			7,500
Payment of lease obligations		(1,261	)		(929	)		(4,382	)		(3,655	)
Repurchase of common shares		(1,670	)		-			(1,670	)		-
		32,244			(3,607	)		13,936			(6,215	)
CASH FLOWS USED IN INVESTING ACTIVITIES
Investments		-			-			(2,689	)		-
Business acquisitions		(59,834	)		(2,928	)		(68,494	)		(65,566	)
Capitalized research and development		-			(2	)		(86	)		(177	)
Equipment and application software		(2,368	)		(2,240	)		(8,354	)		(7,148	)
		(62,202	)		(5,170	)		(79,623	)		(72,891	)

NET CASH OUTFLOW	$	(7,254	)	$	(8,789	)	$	(8,912	)	$	(35,965	)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		40,988			51,435			42,646			78,611
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	33,734		$	42,646		$	33,734		$	42,646

RECONCILIATION OF NON-GAAP MEASURES TO MOST COMPARABLE IFRS MEASURES

The following 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 these 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,		September 30,			September 30,
	2023			2022		2023			2022
Net profit	$	5,119		$	1,195	$	18,885		$	13,604
Depreciation of equipment and application software		2,133			2,308		9,043			6,974
Depreciation of right of use asset		1,352			950		4,501			3,629
Amortization of acquired intangible assets		4,460			3,484		14,874			20,555
Restructuring expense		2,618			-		2,618			-
Other changes in fair value		(314	)		-		(314	)		-
Lease interest expense		159			143		531			451
Changes in fair value related to contingent earn-out		416			2,289		3,858			5,555
Interest expense (income)		634			7		365			295
Deemed Compensation		403			3,314		550			4,314
Income tax		3,401			5,377		11,076			10,555
Adjusted EBITDA	$	20,381		$	19,067	$	65,987		$	65,932

Adjusted Net Profit and Adjusted EPS


	Three months ended					Year ended
	September 30,			September 30,		September 30,			September 30,
	2023			2022		2023			2022
Net profit	$	5,119		$	1,195	$	18,885		$	13,604
Restructuring expense		2,618			-		2,618			-
Other changes in fair value		(314	)		-		(314	)		-
Changes in fair value related to contingent earn-out		416			2,289		3,858			5,555
Deemed Compensation		403			3,314		550			4,314
Amortization of intangibles		4,460			3,484		14,874			20,555
Adjusted net profit		12,702			10,282	$	40,471		$	44,028
Weighted average number of common shares basic		11,790,964			11,399,172		11,714,887			11,343,615
Adjusted EPS Basic		1.08			0.90		3.45			3.88
Adjusted EPS Diluted		1.07			0.90		3.45			3.87

Operating Free Cash Flow


	Three months ended						Year ended
	September 30,			September 30,			September 30,			September 30,
	2023			2022			2023			2022

Cash flows generated from operating activities	$	22,704		$	(12	)	$	56,775		$	43,141
Capitalized research and development		-			(2	)		(86	)		(177	)
Equipment and application software		(2,368	)		(2,240	)		(8,354	)		(7,148	)
Free cash flow	$	20,336		$	(2,254	)	$	48,335		$	35,816

Free cash flow	$	20,336		$	(2,254	)	$	48,335		$	35,816
Adjustments:
Change in non-cash working capital		(9,613	)		16,367			(3,490	)		11,380
Operating free cash flow	$	10,723		$	14,113		$	44,845		$	47,196
Operating free cash flow per share		0.91			1.24			3.83			4.16

The Company uses adjusted net profit, and adjusted earnings per share, which remove the impact of our acquisition amortization and gains, resulting in accounting for acquisitions and changes in fair value to measure our performance. Operating free cash flow measures the company’s cash profitability after required capital spending when excluding working capital changes. 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. Adjusted profit and adjusted earnings per share are not recognized, defined or standardized measures under IFRS. Our definition of adjusted net profit and adjusted earnings per share will likely differ from that used by other companies (including our peers) and therefore comparability may be limited. 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 net profit to the most comparable IFRS financial measure as shown above.

Calian Reports Unaudited Results for the Fourth Quarter and FY23

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