Calian Announces Record Margins On Revenue Of $142M - Second...| MENAFN.COM

Tuesday, 24 May 2022 05:55 GMT

Calian Announces Record Margins On Revenue Of $142M - Second Quarter Results FY22


(MENAFN- ACCESSWIRE)

(All amounts in release are in Canadian dollars)

OTTAWA, ON / ACCESSWIRE / May 11, 2022 / Calian® Group Ltd. (TSX:CGY), a diverse products and services company providing innovative healthcare, communications, learning and cybersecurity solutions, today released its results for the second quarter ended March 31, 2022. Calian reports consolidated revenues of $142 million for its four operating segments, which is a 3% increase from the $138 million reported in the same quarter of the previous year.

Second quarter highlights:

  • Revenue of $142 million, a 3% increase over Q2 FY21
  • Gross margin of 28%, a new record for the Company (24% in the prior year)
  • Adjusted EBITDA of $16.5 million is a new high and a 18% increase over Q2 FY21
  • Adjusted net profit of $13.3 million, a 28% increase over Q2 FY21
  • New contract signings of $160 million
  • Certain information included in this press release is forward-looking and is subject to important risks and uncertainties. The results or events predicted in these statements may differ materially from actual results or events. Such statements are generally accompanied by words such as 'intend', 'anticipate', 'believe', 'estimate', 'expect' or similar statements. Factors which could cause results or events to differ from current expectations include, among other things: the impact of price competition; scarce number of qualified professionals; the impact of rapid technological and market change; loss of business or credit risk with major customers; technical risks on fixed price projects; general industry and market conditions and growth rates; international growth and global economic conditions, and including currency exchange rate fluctuations; and the impact of consolidations in the business services industry. For additional information with respect to certain of these and other factors, please see the Company's most recent annual report and other reports filed by Calian with the Ontario Securities Commission. Calian disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. No assurance can be given that actual results, performance or achievement expressed in, or implied by, forward-looking statements within this disclosure will occur, or if they do, that any benefits may be derived from them.

Access the full report on the Calian Financial Results web page .

Register for the conference call on Thursday, May 12, 2022 8:30 a.m. Eastern Time

'This quarter's performance establishes that the long-term strategic investments we made in the rapidly growing Cybersecurity and Global Defence markets are delivering returns for Calian.' said Kevin Ford, Calian CEO. 'Our initiative to deploy capital to drive long-term value was evident with the impressive performance of our Cybersecurity offerings including a strong start for our recent acquisition of Computex in the United States. Our strong pedigree in the military training market is yielding results in Europe as well as introduction of innovative technology in Canada.'

The second quarter of 2022 carries on the Company's continued growth through acquisition and margin expansion. The Company signed an additional $160 million in new contracts during the quarter and exits with a strong backlog of $1.3 billion.

'Our performance this quarter was due to our diversified four piston engine. As one-time projects from our COVID response efforts last year wound down, we were able to more than offset these with tremendous growth in our IT and Cyber and Learning segments, at significantly higher gross margin and EBITDA margins,' said Patrick Houston, Calian Chief Financial Officer.

'Our four guiding pillars of growth continue to deliver innovation to new and retained long-time customers as we continue our transformation into an innovative global company,' said Kevin Ford. 'Our guidance indicates another record year for Calian.'

Guidance


Low High
CAD '000s

Revenue 580,000 625,000
Adjusted EBITDA 61,000 65,500
Adjusted Net Profit 41,500 45,500

About Calian

We keep the world moving forward. Calian® helps people communicate, innovate, learn, stay safe and lead healthy lives with confidence. Every day, our employees live our values of customer-commitment, integrity, innovation and teamwork to engineer reliable solutions that solve complex problems. That's Confidence. Engineered. A stable and growing 40-year company, we are headquartered in Ottawa with offices and projects spanning North American and International markets. Visit calian.com to learn about innovative healthcare, communications, learning and cybersecurity solutions.

Product or service names mentioned herein may be the trademarks of their respective owners.

Media inquiries:

613-599-8600 x 2298

Investor Relations inquiries:

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DISCLAIMER

Calian · Head Office · 770 Palladium Drive · Ottawa · Ontario · Canada · K2V 1C8
Tel: 613.599.8600 · Fax: 613-592-3664 · General info email:

CALIAN GROUP LTD.
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

As at March 31, 2022 and September 30, 2021
(Canadian dollars in thousands, except per share data)


March 31, September 30,

2022 2021
ASSETS

CURRENT ASSETS

Cash and cash equivalents $ 59,391 $ 78,611
Accounts receivable 159,953 111,138
Work in process 51,836 55,307
Inventory 16,281 6,617
Prepaid expenses 16,887 9,891
Derivative assets 190 610
Total current assets 304,538 262,174
NON-CURRENT ASSETS
Capitalized research and development 2,769 3,217
Equipment 17,105 12,411
Application software 10,098 8,015
Right of use asset 17,427 15,383
Investments 670 670
Acquired intangible assets 57,466 54,519
Deferred tax asset 1,363 1,477
Goodwill 151,847 100,103
Total non-current assets 258,745 195,795
TOTAL ASSETS $ 563,283 $ 457,969
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Line of Credit $ 25,396 $ -
Accounts payable and accrued liabilities 112,880 68,093
Contingent earn-out 38,687 25,038
Provisions 1,509 1,541
Unearned contract revenue 49,769 23,321
Derivative liabilities 33 158
Lease obligations 3,697 3,029
Total current liabilities 231,971 121,180
NON-CURRENT LIABILITIES
Lease obligations 15,860 14,449
Contingent earn-out 2,881 13,224
Deferred tax liabilities 17,696 16,756
Total non-current liabilities 36,437 44,429
TOTAL LIABILITIES 268,408 165,609

SHAREHOLDERS' EQUITY
Issued capital 198,013 194,960
Contributed surplus 5,103 5,224
Retained earnings 90,595 91,359
Accumulated other comprehensive income (loss) 1,164 817
TOTAL SHAREHOLDERS' EQUITY 294,875 292,360
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 563,283 $ 457,969
Number of common shares issued and outstanding 11,346,540 11,285,828

CALIAN GROUP LTD.
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF NET PROFIT

For the Three- and Six-month Periods ended March 31, 2022 and 2021
(Canadian dollars in thousands, except per share data)


Three months ended Six months ended

March 31, March 31,

2022 2021 2022 2021
Revenue



Advanced Technologies $ 39,562 $ 42,731 $ 80,729 $ 80,061
Health 45,452 52,917 87,830 99,970
Learning 24,828 20,901 47,610 38,948
ITCS 32,260 21,921 55,435 35,692
Total Revenue 142,102 138,470 271,604 254,671

Cost of revenues 102,183 104,956 198,031 194,935
Gross profit 39,919 33,514 73,573 59,736

Selling and marketing 5,342 4,035 9,896 7,399
General and administration 16,626 14,358 30,410 25,974
Research and development 1,184 968 2,538 1,805
Profit before under noted items 16,767 14,153 30,729 24,558

Depreciation of equipment, application software and research and development 1,302 1,046 2,429 2,046
Depreciation of right of use asset 878 774 1,701 1,503
Amortization and impairment of acquired intangible assets 10,128 3,041 13,720 5,159
Deemed compensation 247 503 1,000 2,350
Changes in fair value related to contingent earn-out 1,619 1,266 2,615 1,650
Profit before interest income and income tax expense 2,593 7,523 9,264 11,850

Lease obligations interest expense 106 114 214 231
Interest expense (income) 95 233 146 245
Profit before income tax expense 2,392 7,176 8,904 11,374

Income tax expense - current 3,511 2,195 6,485 4,214
Income tax recovery - deferred (2,386 ) (534 ) (3,154 ) (839 )
Total income tax expense 1,125 1,661 3,331 3,375
NET PROFIT $ 1,267 $ 5,515 $ 5,573 $ 7,999

Net profit per share:
Basic $ 0.11 $ 0.55 $ 0.49 $ 0.80
Diluted $ 0.11 $ 0.54 $ 0.49 $ 0.80

CALIAN GROUP LTD.
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Three- and Six-month periods ended March 31, 2022 and 2021
(Canadian dollars in thousands)


Three months ended Six months ended

March 31, March 31,

2022 2021 2022 2021
CASH FLOWS GENERATED FROM OPERATING ACTIVITIES



Net profit $ 1,267 $ 5,515 $ 5,573 $ 7,999
Items not affecting cash:
Interest expense 95 233 146 245
Changes in fair value related to contingent earn-out 1,619 1,266 2,615 1,650
Lease obligations interest expense 106 114 214 231
Income tax expense 1,125 1,661 3,331 3,375
Employee share purchase plan expense 127 102 262 248
Share based compensation expense 525 574 872 1,023
Depreciation, amortization and impairment 12,308 4,861 17,850 8,708
Deemed compensation 247 1,098 1,000 2,945

17,419 15,424 31,863 26,424
Change in non-cash working capital
Accounts receivable (19,400 ) (14,424 ) (16,782 ) (21,432 )
Work in process (4,307 ) (1,831 ) 3,471 10,805
Prepaid expenses (5,882 ) (2,169 ) (5,950 ) (1,403 )
Inventory (192 ) 295 (1,977 ) (430 )
Accounts payable and accrued liabilities 19,398 9,193 3,383 2,710
Unearned contract revenue 14,467 4,042 14,891 9,216

21,503 10,530 28,899 25,890
Interest received (paid) (201 ) (945 ) (360 ) (1,074 )
Income tax recovered (paid) (2,088 ) (3,397 ) (5,161 ) (7,099 )

19,214 6,188 23,378 17,717
CASH FLOWS GENERATED FROM FINANCING ACTIVITIES
Issuance of common shares net of costs 1,468 77,049 1,798 77,897
Dividends (3,171 ) (2,776 ) (6,337 ) (5,520 )
Draw (repayment) on line of credit 25,396 55,000 25,396 55,000
Payment of lease obligations (918 ) (771 ) (1,760 ) (1,480 )

22,775 128,502 19,097 125,897
CASH FLOWS USED IN INVESTING ACTIVITIES
Business acquisitions (47,924 ) (43,864 ) (58,222 ) (45,492 )
Capitalized research and development (36 ) (93 ) (150 ) (212 )
Equipment and application software (1,993 ) (1,086 ) (3,323 ) (2,218 )

(49,953 ) (45,043 ) (61,695 ) (47,922 )

NET CASH (OUTFLOW) INFLOW $ (7,964 ) $ 89,647 $ (19,220 ) $ 95,692
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 67,355 30,280 78,611 24,235
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 59,391 $ 119,927 $ 59,391 $ 119,927

Reconciliation of Non-GAAP Measures to Most Comparable IFRS Measures

These non-GAAP measures are mainly derived from the consolidated financial statements, but do not have a standardized meaning prescribed by IFRS; therefore, others using these terms may calculate them differently. The exclusion of certain items from non-GAAP performance measures does not imply that these are necessarily nonrecurring. From time to time, we may exclude additional items if we believe doing so would result in a more transparent and comparable disclosure. Other entities may define the above measures differently than we do. In those cases, it may be difficult to use similarly named non-GAAP measures of other entities to compare performance of those entities to the Company's performance.

Management believes that providing certain non-GAAP performance measures, in addition to IFRS measures, provides users of the Company's financial reports with enhanced understanding of the Company's results and related trends and increases transparency and clarity into the core results of the business. Adjusted EBITDA excludes items that do not reflect, in our opinion, the Company's core performance and helps users of our MD&A to better analyze our results, enabling comparability of our results from one period to another.

Adjusted EBITDA


Three months ended Six months ended

March 31, March 31, March 31, March 31,

2022 2021 2022 2021
Net profit $ 1,267 $ 5,515 $ 5,573 $ 7,999
Depreciation of equipment and application software 1,302 1,046 2,429 2,046
Depreciation of right of use asset 878 774 1,701 1,503
Amortization and impairment of acquired intangible assets 10,128 3,041 13,720 5,159
Lease interest expense 106 114 214 231
Changes in fair value related to contingent earn-out 1,619 1,266 2,615 1,650
Interest expense (income) 95 233 146 245
Deemed Compensation 247 503 1,000 2,350
Income tax 1,125 1,661 3,331 3,375
Adjusted EBITDA $ 16,767 $ 14,153 $ 30,729 $ 24,558

Adjusted Net Profit and Adjusted EPS


Three months ended Six months ended

March 31, March 31, March 31, March 31,

2022 2021 2022 2021
Net profit $ 1,267
$ 5,515
$ 5,573 $ 7,999
Changes in fair value related to contingent earn-out 1,619 1,266 2,615 1,650
Deemed Compensation 247 503 1,000 2,350
Amortization and impairment of intangibles 10,128 3,041 13,720 5,159
Adjusted net profit 13,261 10,325 $ 22,908 $ 17,158
Weighted average number of common shares basic 11,325,786 10,091,840 11,312,537 9,937,876
Adjusted EPS Basic 1.17 1.02 2.03 1.73
Adjusted EPS Diluted 1.16 1.02 2.01 1.71

The Company uses adjusted net profit and adjusted earnings per share, which remove the impact of our acquisition amortization and gains, resulting in accounting for acquisitions and changes in fair value to measure our performance. These measurements better align the reporting of our results and improve comparability against our peers. We believe that securities analysts, investors and other interested parties frequently use non-GAAP measures in the evaluation of issuers. Management also uses non-GAAP measures in order to facilitate operating performance comparisons from period to period, prepare annual operating budgets and assess our ability to meet our capital expenditure and working capital requirements. Adjusted profit and adjusted earnings per share are not recognized, defined or standardized measures under the International Financial Reporting Standards. Our definition of adjusted profit and adjusted earnings per share will likely differ from that used by other companies (including our peers) and therefore comparability may be limited. Non-GAAP measures should not be considered a substitute for or be considered in isolation from measures prepared in accordance with International Financial Reporting Standards. Investors are encouraged to review our financial statements and disclosures in their entirety and are cautioned not to put undue reliance on non-GAAP measures and view them in conjunction with the most comparable International Financial Reporting Standards financial measures. The Company has reconciled adjusted profit to the most comparable International Financial Reporting Standards financial measure as shown above.

SOURCE: Calian Group Ltd.

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