Calian Group’s stock price plummeted Wednesday after the Kanata-based company said its second-quarter revenues declined amid a slowdown in federal government spending and fallout from the global trade war. Calian shares ended the day at $40 on the Toronto Stock Exchange, down nearly 18 per cent from the previous day’s closing price and not far […]
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Calian Group’s stock price plummeted Wednesday after the Kanata-based company said its second-quarter revenues declined amid a slowdown in federal government spending and fallout from the global trade war.
Calian shares ended the day at $40 on the Toronto Stock Exchange, down nearly 18 per cent from the previous day’s closing price and not far off the company’s 52-week low of $38.91.
The steep drop came in the wake of a second-quarter earnings report that CEO Kevin Ford conceded “fell short of expectations” and prompted Calian to withdraw its fiscal 2025 guidance.
The company reported revenues of $193.7 million for the three-month period ending March 31, a decrease of four per cent from a year earlier.
Calian posted a net profit of $300,000, or two cents per diluted share, down from $4.9 million, or 41 cents per diluted share, a year ago. Meanwhile, its adjusted EBITDA fell 36 per cent year-over-year to $17 million.
The company said the drop in profitability was primarily due to investments in “selling capacity”, amortization and deemed compensation expenses related to acquisitions.
It was a particularly rough three-month stretch for Calian’s IT and cybersecurity division, where revenues fell to $51.1 million from $68.2 million in the second quarter of 2024.
The company blamed the drop largely on procurement delays from key government customers as new contract signings were put on hold during the recent federal election.
“While we had anticipated some slowdown with the pending election, the impact was more significant than anticipated,” Ford told analysts during a conference call Wednesday morning to announce Calian’s latest earnings.
“The good news is that we believe this is a timing issue, and we will recapture these opportunities in the back half of the year.”
But the company said it was also facing headwinds on a number of other fronts, including a pause on new IT and cyber deals in the United States as customers south of the border assess the potential impact of U.S. President Donald Trump’s new tariffs as well as higher costs as Calian transitions clients from its own in-house cybersecurity platform to a new one powered by Microsoft.
Still, Ford said he remained upbeat about the firm’s IT and cyber business, telling analysts he believes new deals with partners such as Microsoft and Calian’s investments in “AI-driven innovation” and other new technology bode well for the future.
“The fundamentals of the ITCS business remain strong,” he said. “While we are in the early stages of our transformation, we are highly confident in the long-term outlook for ITCS.
“I think in a couple of quarters, we’ll be very excited about where this thing is going.”
Nonetheless, the IT division’s tepid performance has forced Calian to rethink its sales projections for the rest of the year.
The firm previously said it expected to generate between $800 and $880 million in revenues in fiscal 2025, up from $747 million in fiscal 2024. But Calian said Wednesday it was withdrawing its guidance due to the potential impact of lower ITCS revenues.
Ford tried to put a positive spin on the situation, stressing that Calian’s other divisions – advanced technologies, health and learning – are still “performing to expectations” as revenues rose year-over-year in all three segments.
