Calian to create independent U.S. subsidiary with focus on government and defence clients

Calian Group plans to create an independent U.S.-based subsidiary in a bid to generate more government and defence business south of the border, the Kanata company said Wednesday. The new entity, called Calian US Inc., will be headquartered in New Jersey. Leeana Smith-Ryland, who currently heads Calian’s Hawaii-based satellite communications services provider Calian Pacific Teleports, will become president of Calian US. Calian CEO Kevin Ford said it will likely take 12 to 18 months to launch the new subsidiary. The plan is in its early stages, he explained, noting many details, including the new organization’s ownership structure, still need to be worked out. “There’s every opportunity to rush this and do it wrong,” Ford told Techopia. “We’re going to do it right. We’ll look at the market, we’ll look at how the structure needs to be … and we’ll deal with all the approvals and regulations required to do this properly.” The move comes as Calian continues to expand its geographic footprint through ongoing acquisitions in the United States and Europe. Thanks largely to Calian’s aggressive M&A agenda, customers from outside Canada accounted for 32 per cent of the publicly traded firm’s revenues in fiscal 2024, up from 25 per cent four years earlier.  Many of those customers are in defence-related industries as Calian has strengthened its ties to NATO and many European military forces through acquisitions such as Mabway, a U.K.-based company that has been providing training and tools that simulate real-world operational environments to the British Army for more than a decade. Meanwhile, Calian has also used acquisitions to bolster its U.S. presence, purchasing Hawaii Pacific Teleport – now Calian Pacific Teleport – in 2023 and Houston-based IT and cybersecurity provider Computex in 2022. The company now has offices in four U.S. states, and Ford said establishing a new subsidiary south of the border is a “natural evolution” of Calian’s long-term strategy to grow its revenues beyond Canada. “We have been diversifying … and the U.S., frankly, is the logical extension in that journey just based on the size of the market here and the fact that I think we’re building relevant products and services that can address some of the opportunities here in the U.S.,” he said from Orlando, where he was attending a trade show for providers of military training and simulation equipment. “I’m walking around the (convention) floor, and I just see nothing but opportunities,” Ford added. “I think we are relevant. And now we’ve got to build the right structure around it to enable this business to happen.” Calian’s expertise in satellite communications components and military training simulations should make it an attractive potential business partner for many customers in the defence sector, Ford predicted.  “It’s important to stay focused here, so I think coming out of the blocks, those are the two (product areas) that kind of resonate with me,” he said. “Then we’ll assess others as we go forward.”  Calian’s announcement comes in the wake of U.S. president-elect Donald Trump’s recent threat to slap 25 per cent tariffs on all goods entering the country from Canada and Mexico.  However, Ford said his firm’s decision to launch a new U.S. subsidiary has been more than a year in the making and was not a response to Trump’s tariff threat. “I appreciate the timing and everything, but a lot of this is a thought-out diversification strategy,” he explained. It’s not the first time Calian has set up a separate corporate entity in the U.S. The company sold a previous subsidiary, which was headquartered in Washington, D.C., and focused on defence customers, after Ford became CEO in 2015. “It was just in a market that wasn’t growing and, frankly, it’s just a lot of work to run a (foreign-owned and controlled entity),” he said. “If you’re going to do it, it’s got to be warranted by the size of the market and the investments that we’re making there.” Ford thinks things will be different this time around. Calian is a much more diversified company than it was a decade ago, and its ability to “knit together” complex solutions in areas such as cybersecurity, military training and satellite technology should serve it well as it tries to grab a bigger piece of the massive U.S. market, Ford said. “We’ve just got to be smart about where we’re putting our chess pieces here, and I think this is a good step in that direction.” Calian's forecasts call for revenues of between $800 million and $880 million in the current fiscal year, which equates to 12 per cent year-over-year growth in the midpoint of the range. In its most recent three-year plan, the company set a goal of reaching $1 billion in annual revenues by 2026. Calian shares were down 56 cents to $49.96 in mid-afternoon trading on the Toronto Stock Exchange.