Despite a record-setting third quarter, Calian Group says it expects revenues for fiscal 2024 to come in at the low end of its projected guidance after one of its key customers announced budget cuts.
The Kanata-based provider of health-care and IT services, training and advanced technology reported revenues of $185 million for the three-month period ending June 30, up 11 per cent from the previous year and the highest third-quarter total in the company’s history.
At the same time, however, Calian is tempering expectations for fiscal 2024. The firm is now predicting its full-year revenues will be at the bottom end of their projected range of $750 million to $810 million.
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Calian said that would translate into revenue growth of 14 per cent over fiscal 2023 and adjusted EBITDA growth of 30 per cent. It would mark the company’s seventh consecutive year of double-digit revenue growth.
The updated prediction comes after Calian raised its full-year guidance in May from its original range of $730 million to $780 million. The company said it was lowering market expectations “due to short-term operating budget cuts from the Canadian Armed Forces, which have affected the latter half of its third quarter and are expected to continue into the fourth quarter.”
While Calian’s revenues rose year-over-year, its third-quarter net profit dipped to $1.3 million, or 11 cents per diluted share. That’s down from $4.7 million, or 40 cents per diluted share, in the same period a year earlier.
The company attributed the decrease in net earnings to increased amortization and interest expenses related to acquisitions.
Among Calian’s major moves in the third quarter was finalizing its acquisition of U.K.-based Mabway for up to $47 million in a move aimed at broadening its offerings in the military training and simulation sector.
Mabway is a leader in large-scale defence role-playing environments that simulate real-world operational environments, and provides technical engineering education for naval and maritime communities.
The company, which has a workforce of more than 1,000 ex-military and civilian permanent staff and contractors, has been a supplier to the British Army since 2012.
Calian CEO Kevin Ford also noted his firm landed a series of new contracts in the quarter valued at more than $300 million. They include deals with the Canadian Armed Forces and major defence contractor General Dynamics Mission Systems.
“In the third quarter, we continued our growth journey towards becoming a global business with over $1 billion in (annual) revenues,” Ford said in a statement last week.
“We did encounter some headwinds as the result of short-term budget reductions from the Canadian Armed Forces, and we expect this to persist for a few quarters. Despite this, after nine months, our revenues are up 17 (per cent), adjusted EBITDA is up 38 (per cent), and we are on track for our seventh consecutive record year.”
Calian’s shares were up $1.80, or nearly four per cent, to $47.60 in midday trading on the Toronto Stock Exchange. The firm’s stock price has fallen more than 17 per cent since the beginning of 2024.
