Calian Group says it is making cuts in “targeted areas” after the Kanata-based firm reported higher revenues but lower profits in the third quarter compared with a year earlier.
Calian CEO Kevin Ford said the restructuring plan, which was launched last week, is expected to generate annual savings of about $8 million, with total one-time implementation costs of about $2 million.
“We believe it is prudent at this time to proactively rebalance our investment levels in certain areas of our business in order to drive a more optimal level of growth and profitability,” Ford said in a statement last week as the company announced its financial results for the quarter ending June 30.
OBJ360 (Sponsored)
The Ottawa Hospital’s Campaign to Create Tomorrow enters important next phase
For Ginger Bertrand, some of her earliest childhood memories in Ottawa are centred around healthcare. “I grew up across the street from what was originally the General Hospital,” she explains,
Investing in the next generation: Ottawa businesses encouraged to build futures through mentorship
Do you remember the mentor in your life who helped shape your career? In the business world, success often depends on the connections we build, fuelled by guidance and support
“Subsequent to quarter end, we underwent a complete review of our delivery capacity and overhead costs and already started to initiate cuts in targeted areas.”
The cost-cutting measures came as Calian reported revenues of $167 million in the third quarter of fiscal 2023, up from $150 million the previous year.
Calian, which delivers a range of products and services from cybersecurity software to satellite components, turned a net profit of $4.7 million, or 40 cents per diluted share, down from $6.8 million in the third quarter of 2022.
The firm’s adjusted EBITDA also fell 10 per cent year-over-year to $14.5 million, a drop Calian attributed to increased operating expense investments.
Calian posted double-digit revenue growth in three of its four main market segments – health, learning and advanced technologies – while revenues in its IT division fell six per cent compared with the previous year due mainly to lower shipments in its U.S.-based product resale business.
The firm signed $131 million worth of new contracts in the quarter. Calian reiterated previous projections calling for total 2023 revenues of between $630 million and $680 million.
The company also announced it completed its $62-million acquisition of Hawaii Pacific Teleport, which supplies satellite and fibre-based communications services in the Americas, Asia and Australia, on Aug. 1.
In addition, Calian closed a $180-million debt facility in late July with a lending syndicate that includes the Royal Bank of Canada, Desjardins Capital Markets, Canadian Imperial Bank of Commerce and Bank of Montreal.
The new three-year term revolving credit facility with the lending syndicate includes an uncommitted accordion of $70 million for total availability of up to $250 million and replaces the company’s previous debt facility with RBC and Desjardins.
