Calian on track to crack $600M revenue barrier despite market headwinds, CEO says

Kevin Ford
Kevin Ford is CEO of Calian Group. File photo

Calian Group set a new record for first-quarter revenues and remains on track to exceed $600 million in annual sales for the first time, despite facing headwinds such as rising inflation and supply chain bottlenecks, the company said Wednesday.

The Kanata-based firm – which is divided into four main divisions that deliver a range of products and services from cybersecurity software to satellite components – reported revenues of $147.5 million for the three-month period ending Dec. 31, the first quarter of its fiscal 2023.

That’s a 14 per cent gain from a year earlier, and it comes even though two of Calian’s four segments – advanced technologies and health – saw their sales drop from the first quarter of 2022. 

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Those losses, however, were more than offset by increased revenues in Calian’s IT and learning divisions, which were buoyed by surging demand for cybersecurity services and military training software and related components.

Calian posted a net profit of $4.6 million, or 39 cents per diluted share, compared with $4.3 million, or 38 cents per diluted share, a year earlier. It marks the company’s 85th consecutive quarterly profit. 

CEO Kevin Ford told analysts on a conference call Wednesday morning that Calian is riding a wave of demand for its cybersecurity products, offerings that were bolstered by the firm’s acquisition of Texas-based Computex just over a year ago. 

Calian posted IT and cybersecurity revenues of $46.4 million in the first quarter compared with $23.2 million a year earlier, with nearly 90 per cent of that growth stemming from the additional sales Computex generated for the company.

Revenues from the firm’s learning segment that specializes in combat simulation software and other training products for military customers such as NATO rose to $26.4 million from $22.8 million the previous year.

Ford said he expects Calian’s training revenues to surpass the $100-million mark in 2023 as the firm’s brand awareness grows among military organizations in North America and Europe – markets Calian has tapped aggressively in recent years through a number of acquisitions.

“The continued demand for training, especially in the military environment, is strong,” he said. “We really don’t see the pace slowing down.”

Coming off a record 2022 in which its total revenues grew 12 per cent to $582 million, Calian is projecting double-digit growth again in 2023. The company reiterated its previously stated revenue projections of $630 million to $680 million for the current fiscal year. 

Although quarterly revenues in Calian’s health division fell five per cent and its advanced tech revenues were down 17 per cent, Ford told analysts he remains confident that both segments will bounce back quickly. 

Health revenues took a major hit as demand for COVID-related services such as vaccination clinics dried up over the course of 2022, Ford said. But he added that Calian sees “multiple growth avenues” in areas such as professional services, contract research and pharmaceutical patient support services. 

Meanwhile, a shortage of key components delayed work on the satellite ground-system projects in which Calian plays a significant role, affecting $5 million worth of new orders in the advanced technologies segment last quarter. 

But Ford said growing demand for Calian’s higher-margin precision satellite services helped make up for that lost income, saying the division signed $42 million worth of new contracts in the quarter.

Ford said Calian’s pipeline of new orders continues to grow, and he told analysts he’s hopeful that the supply chain issues that plagued the company throughout 2022 will soon be resolved. 

Overall, the company signed $126 million in new business in the first quarter. Its order backlog now stands at $1.3 billion.

“We are seeing some relief,” Ford said. “We are starting to see orders where we can predict when we can deliver. We’re quite confident in our ability to deliver another record year.”

Calian shares were down $1.45, or just over two per cent, to $60.55 in early afternoon trading on the Toronto Stock Exchange.

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