With its “four-piston engine” firing on all cylinders, Calian Group is on track to crack the half-billion-dollar mark in revenues before the fiscal year is out.
The Kanata firm – which delivers products and services ranging from rapid COVID testing to antennas for satellite systems – posted significant sales gains across all four of its main divisions in the last quarter, the company said Wednesday as it raised its full-year revenue guidance for the third time in 2021.
Calian is now projecting revenues of between $500 million and $525 million for the fiscal year ending Sept. 30, up from the previous range of $476 million to $516 million it set a few months back.
That bullish outlook comes after Calian posted revenues of $136 million in its fiscal third quarter ending June 30, an increase of 29 per cent over the previous year. In addition, the firm stretched its streak of profitable quarters to 79 in a row with a net profit of $2.1 million, compared with $3.9 million a year ago.
While net profits are down, Calian’s adjusted net profit – a metric the company likes to highlight because it takes factors such as amortization and gains from its many recent acquisitions out of the equation – rose a whopping 98 per cent year-over-year to $11.1 million.
That jump – not to mention record gross margins of 25 per cent and adjusted earnings before taxes, depreciation and amortization of $14.9 million, up 66 per cent – had Calian executives in an upbeat mood during Wednesday morning’s call with financial analysts.
"We are growing, and we’re going to need that strategic investment in certain pieces to sustain and help us propel that growth."
CEO Kevin Ford said Calian’s stated goal of being a billion-dollar annual revenue-generator is getting closer with each passing year, adding the firm is doubling down on investments in key areas such as research and marketing to help it get there.
Calian spent $1.2 million on R&D in the third quarter, nearly triple last year’s total, and boosted its sales and marketing budget by 40 per cent.
“We are growing, and we’re going to need that strategic investment in certain pieces to sustain and help us propel that growth,” Ford said.
Not surprisingly given the ongoing pandemic, the performance of Calian’s health-care segment dominated much of the discussion on Wednesday.
The division continued to be Calian’s biggest source of cash flow in Q3, accounting for more than a third of overall revenues at $50.8 million.
The company’s nurses vaccinated more than 50,000 Canadians in Q3, Ford told analysts, while the firm oversaw seven rapid-testing initiatives across the country.
While efforts to contain COVID-19 have fuelled much of the segment’s growth over the past 15 months, the CEO said he sees other factors that point to “continued momentum” for Calian in the health-care space.
Acquisitions paying off
The firm runs Canada’s largest network of medical practitioners through partnerships at more than 180 clinics across the country at military bases, Loblaws supermarkets and other locations.
In addition, Ford noted the company is gaining valuable expertise in delivering virtual health services through strategic moves such as its recent acquisition of Toronto-based digital health-care provider Dapasoft.
“We not only bring the technology, we have that network nationally and … we’re starting to deploy that globally,” he said. “I’m pretty excited about the potential. That ability for us to react, respond and deliver effectively is just increasing our health-care brand right across the country.”
Calian officials said they also see a “great pipeline of opportunities” emerging from the advanced technology group, which makes products such as satellite components.
Last week, the company signed a multi-year deal with an electric vehicle manufacturer that will see Ottawa-based Tallysman – one of Calian’s seven acquisitions since mid-2020 – produce state-of-the-art global positioning antennas for the carmaker beginning this fall.
Chief financial officer Patrick Houston said the agreement is expected to be worth as much as $10 million in 2022 and will increase in value as EV production ramps up over the next few years.
“It’s an exciting space to be in,” he said.
And after a busy year of snapping up companies, Calian doesn’t appear to be done yet.
In response to an analyst’s question, Ford said he and his team will continue to seek out M&A opportunities even as they focus on integrating the recent bevy of acquisitions into the Calian fold.
“We’re feeling very confident with regard to our ability to continue with the M&A (activity),” he said.
“We definitely have the balance sheet to do that. We’re not going to get into bidding wars or try to overpay for something. We’ll continue to make sure we follow our playbook.”
Calian shares closed the day up $1.91 to $64.80 on the Toronto Stock Exchange.