Calian Group Declares Exciting First Quarter Results
Calian Reports Positive First Quarter Outcomes
(All amounts in release are in Canadian dollars)
OTTAWA, Ontario — Calian Group Ltd. (TSX:CGY), a diversified company specializing in healthcare, communications, learning, and cybersecurity solutions, has announced its financial results for the first quarter ended December 31, 2024.
Performance Highlights
Q1-25 Achievements:
- Revenue increased by 3% to $185 million
- Gross margin at 31.8%, slightly down from 32.5% the previous year
- Adjusted EBITDA of $18 million, a decrease from $21 million from last year
- Operating free cash flow of $13 million, down from $17 million last year
- A net debt to adjusted EBITDA ratio standing at 0.6x
- Share repurchase program saw 101,350 shares bought back for $4.9 million
- Guidance for the year is reiterated
- Launch of a new U.S. subsidiary focusing on government and defense sectors
Financial Overview
During this quarter, Calian achieved significant revenue growth of 3%, rising from $179 million to $185 million, marking the highest revenue in the first quarter in the company's history. The growth was bolstered by an 8% increase from acquisitions, while a soft organic growth of 5% occurred due to adjustments in the domestic training sector.
The gross margin reflected a solid performance, holding above 30% for the 11th consecutive quarter. However, the adjusted EBITDA decreased to $18 million due to a mix in revenue streams and increased investments in operational capacities. This adjustment resulted in a shave to the adjusted EBITDA margin, which declined to 9.6% from 11.9% compared to the last year.
On the profitability front, the company reported a net profit of $(1) million or $(0.08) per diluted share, significantly down from $6 million or $0.46 per diluted share from the previous year. This decrease was primarily driven by higher amortization and operational expenses. Conversely, the adjusted net profit stood at $10 million or $0.88 per diluted share, compared to $14 million or $1.17 per diluted share last year.
Capital Management and Growth Strategies
Calian CFO Patrick Houston expressed optimism concerning cash generation, as the company produced $13 million in operating free cash flow, reflecting a robust 73% conversion rate from adjusted EBITDA. The use of cash for growth initiatives involved paying contingent liabilities amounting to $11 million alongside capital expenditures of $1 million, while also returning $3 million to shareholders through dividends and nearly $5 million on share buybacks.
Establishing a U.S. Presence
A highlight of this quarter was the announcement of the establishment of an independent U.S.-based subsidiary, Calian US, Inc. The subsidiary will target government contracts by ensuring compliance with U.S. regulations while aiming for necessary certifications.
Dividend Announcements
On February 12, Calian declared a quarterly dividend of $0.28 per share, payable to shareholders in March. This reflects the company's determination to maintain shareholder value amidst fluctuating earnings.
Future Guidance
The guidance shared for the fiscal year 2025, which includes contributions from recent acquisitions, hints at another record revenue and EBITDA growth. The midpoint provides a promising outlook with a projected revenue growth of 12% and adjusted EBITDA growth of 10%, leading to a continued trend of double-digit growth.
Conclusion: Strong Positioning for the Future
Kevin Ford, CEO of Calian, commented on the quarter's performance positively, mentioning the momentum across diverse markets and a strong demand for defense solutions. With this ongoing demand and increasing military investment discussions, Calian stands well-positioned for success moving forward.
Frequently Asked Questions
What were Calian Group's total revenues in Q1-25?
Calian Group reported total revenues of $185 million for the first quarter, reflecting a 3% increase from the previous year.
What is the adjusted EBITDA for Calian Group in this quarter?
The adjusted EBITDA for Calian Group was $18 million, down from $21 million in the previous year.
What factors contributed to the decline in net profit?
The decline in net profit was primarily due to increased accounting charges related to amortization and higher operational expenses.
How much cash flow was generated from operations?
Calian generated $13 million in operating free cash flow during this quarter.
What is the current net debt to adjusted EBITDA ratio of Calian?
Calian's net debt to adjusted EBITDA ratio stands at 0.6x, indicating strong financial positioning.
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