Calian eyes cost cuts as Kanata firm’s revenues rise, profits fall in third quarter

Calian headquarters

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.

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“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.

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