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Calian Reports Record Second Quarter Results

OTTAWA, May 12, 2020 (GLOBE NEWSWIRE) -- Calian Group Ltd. (CGY.TO) today released its quarterly results for the three-month period ended March 31, 2020.

Second quarter 2020 highlights:

      • Record quarterly revenue for the seventh consecutive quarter

      • Quarterly revenue at $104.5 million, exceeding $100 million for the first time  

      • Adjusted EBITDA(1) at $10.2 million 

      • 74th consecutive profitable quarter

      • New contract signings of $140 million

      • Dividend of $0.28 per share

The Company reported revenues for the quarter of $104.5 million, representing a 25% increase from the $83.4 million reported in the same quarter of the previous year.

Adjusted EBITDA(1) for the second quarter was $10.2 million, an increase of 55% from $6.6 million in the same quarter of the previous year. Net profit for the second quarter was $5.3 million, an increase of 36% from $3.9 million in the same period of the prior year. Adjusted net profit,(1) which excludes non-cash items related to recent acquisitions, was $6.8 million for the quarter; this compares to $4.5 million in the same period of the previous year.

"It is exciting to report another record quarter for both revenue and EBITDA. The execution of profitable growth during these challenging economic times speaks to the criticality of our products and services,” stated Patrick Houston, CFO. “We also completed a successful public offering this quarter which strengthens our balance sheet and allows us to pursue new growth opportunities.”

“First, I would like to thank all of the frontline health and essential service workers for their dedication and courage during these very challenging times,” said Kevin Ford, President and CEO. “Frontline health workers, Canadian Armed Forces members and other essential service professionals, including our own dedicated staff at Calian, are serving those in need on a daily basis and as a result encounter exposure risk. From all of us at Calian, we recognize and offer our deepest appreciation for your service.”

“Calian has remained resilient through this crisis. We again saw the results of our diversified engine at work during the quarter. The Advanced Technologies segment posted very positive organic revenue growth of 60%, and 7% from acquisitions, compared to the same period a year earlier, with top line contributions from a new ground systems project and our newly launched mobile wireless product. Health revenues rose 16% from a year earlier as we completed an acquisition and continued to grow organically. Information Technology posted 7% revenue growth on stronger solutions sales for our cyber security practice. Our Learning segment had a slight decline due to some delays in major training exercises related to COVID-19 and pace of new business,” said Ford. “The Company also posted strong contract signings of $140M in the quarter, increasing our overall contract backlog.”

“During the quarter we were very happy to close the acquisition of Allphase Clinical Research Services Inc. and Alio Health Services Inc. (collectively, “Allphase/Alio”), in support of our customer diversification objectives and innovation agenda. Their teams are already making strong contributions,” said Ford.  “We continue to seek new M&A opportunities across all four of our segments.”

“While the COVID-19 pandemic has impacted Calian, our delivery of essential services has supported the Company’s growth during this extraordinary time. We were pleased to recently announce our successful recompete for a contract from the Department of National Defence (DND), to provide training services for the Canadian Forces School of Aerospace Technology and Engineering (CFSATE). With two optional extension periods of two years each, the aggregate contract value over the full six-year period is approximately $54 million.

“With a solid cash position and access to our debt facility, we have the liquidity we need to carry us through the short-term and financing available to support the Company’s continued innovation, and long-term, profitable growth,”  said Ford.

Guidance

                 
    Previous Guidance
Feb 6, 2020
  Current Guidance
May 12, 2020
    Low   High   Low   High
Revenue $ 380,000 $ 410,000 $ 380,000 $ 410,000
                 
Adjusted EBITDA $ 34,306 $ 36,728 $ 34,306 $ 36,728
Adjusted EBITDA per share   4.25   4.55   3.77   4.03
Adjusted net profit   20,180   22,602   20,180   22,602
Adjusted net profit per share   2.50   2.80   2.21   2.48
Anticipated weighted average shares outstanding   8,072,000   9,110,735

Current per share guidance reflects the equity financing that the Company completed in February 2020. The Company has included the anticipated weighted average shares to give users the ability to compare current guidance to previously issued guidance.

(1) Caution regarding non-GAAP measures:

This press release is based on reported earnings in accordance with IFRS. Reference to generally accepted accounting principles (GAAP) means IFRS, unless indicated otherwise. This press release is also based on non-GAAP financial measures including EBITDA, adjusted net profit and adjusted net profit per share. These non-GAAP measures do not have a standardized meaning prescribed by IFRS; therefore, others using these terms may calculate them differently. Management believes that providing certain non-GAAP performance measures, in addition to IFRS measures, provides users of our financial reports with enhanced understanding of our results and related trends and increases transparency and clarity into the core results of our business. Refer to the MD&A for definitions of these metrics and reconciliations to the most comparable IFRS measures.

About Calian

Calian employs over 3,400 people in its delivery of diverse products and solutions for private sector, government and defence customers in North American and global markets. The Company’s diverse capabilities are delivered through four segments: Advanced Technologies, Health, Learning and Information Technology. The Advanced Technologies segment provides innovative products, technologies and manufacturing services and solutions for the space, communications, defence, nuclear, government and agriculture sectors. The Health segment manages a network of more than 1,800 health care professionals delivering primary care and occupational health services to public and private sector clients across Canada. Learning is a trusted provider of emergency management, consulting and specialized training services and solutions for the Canadian Armed Forces and clients in the defence, health, energy and other sectors. The Information Technology segment supports public- and private-sector customer requirements for subject matter expertise in the delivery of complex IT and cyber security solutions. Headquartered in Ottawa, the Company’s offices and projects span Canada and international markets.

For investor information, please visit our website at www.calian.com or contact us at ir@calian.com

Kevin Ford Patrick Houston Media inquiries:
President and Chief Executive Officer Chief Financial Officer Simon Doyle
613-599-8600 613-599-8600 613-599-8600 x 2205


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DISCLAIMER

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.

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


CALIAN GROUP LTD.
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
As at March 31, 2020 and September 30, 2019
(Canadian dollars in thousands, except per share data)

           
  March 31,    September 30, 
  2020   2019
ASSETS          
CURRENT ASSETS          
Cash and cash equivalents $ 33,209     $ 17,135  
Accounts receivable   79,025       63,977  
Work in process   65,456       39,221  
Inventory   4,192       3,147  
Prepaid expenses   5,517       5,403  
Derivative assets   153       96  
Total current assets   187,552       128,979  
NON-CURRENT ASSETS          
Capitalized research and development   4,331       3,216  
Equipment   10,907       10,965  
Application software   2,224       1,013  
Right of use asset   17,708       -  
Investment and loan receivable   670       452  
Acquired intangible assets   23,509       16,699  
Goodwill   42,268       33,702  
Total non-current assets   101,617       66,047  
TOTAL ASSETS $ 289,169     $ 195,026  
LIABILITIES AND SHAREHOLDERS’ EQUITY          
CURRENT LIABILITIES          
Line of Credit $ -     $ 13,000  
Accounts payable and accrued liabilities   55,666       45,058  
Contingent earn-out   6,932       800  
Provisions   1,108       1,129  
Unearned contract revenue   11,725       8,778  
Derivative liabilities   297       143  
Lease obligations   2,561       -  
Total current liabilities   78,289       68,908  
NON-CURRENT LIABILITIES          
Lease obligations   17,085       -  
Contingent earn-out   2,438       5,519  
Deferred tax liabilities   4,600       5,525  
Total non-current liabilities   24,123       11,044  
TOTAL LIABILITIES   102,412       79,952  
           
SHAREHOLDERS’ EQUITY          
Issued capital   103,248       32,515  
Contributed surplus   1,893       1,817  
Retained earnings   86,726       81,608  
Accumulated other comprehensive income (loss)   (5,110 )     (866 )
TOTAL SHAREHOLDERS’ EQUITY   186,757       115,074  
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 289,169     $ 195,026  
Number of common shares issued and outstanding   9,638,157       7,929,238  


CALIAN GROUP LTD.
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF NET PROFIT
For the three and six month periods ended March 31, 2020 and 2019
(Canadian dollars in thousands, except per share data)

                       
  Three months ended   Six months ended
  March 31,    March 31, 
  2020   2019   2020   2019
Revenue                      
Advanced Technologies $ 39,856     $ 23,903     $ 79,899     $ 47,717  
Health   32,241       27,809       62,251       55,159  
Learning   17,334       17,637       32,442       33,487  
Information Technology   15,060       14,065       29,143       26,972  
Total Revenue   104,491       83,414       203,735       163,335  
Cost of revenues   80,988       65,278       159,977       128,355  
Gross profit   23,503       18,136       43,758       34,980  
Selling and marketing   3,344       2,320       6,121       4,783  
General and administration   9,528       8,892       18,186       17,307  
Research and development   436       361       850       640  
Profit before under noted items   10,195       6,563       18,601       12,250  
Depreciation of equipment and application software   584       540       1,156       1,035  
Depreciation of right of use asset   685       -       1,356       -  
Amortization of acquired intangible assets   1,217       422       2,106       702  
Other changes in fair value   -       -       (101 )     -  
Changes in fair value related to contingent earn-out   289       237       496       379  
Profit before interest income and income tax expense   7,420       5,364       13,588       10,134  
Lease obligations interest expense   122       -       232       -  
Interest expense (income)   178       (23 )     241       (55 )
Profit before income tax expense   7,120       5,387       13,115       10,189  
Income tax expense (recovery) – current   2,048       1,649       4,027       3,005  
Income tax expense (recovery) – deferred   (204 )     (126 )     (521 )     (35 )
Total income tax expense   1,844       1,523       3,506       2,970  
NET PROFIT $  5,276     $  3,864     $  9,609     $  7,219  
Net profit per share:                      
Basic $ 0.60     $ 0.50     $ 1.15     $ 0.93  
Diluted $ 0.59     $ 0.49     $ 1.13     $ 0.92  
 

CALIAN GROUP LTD.
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three and six month periods ended March 31, 2020 and 2019
 (Canadian dollars in thousands)

                       
  Three months ended   Six months ended
  March 31,    March 31, 
  2020   2019   2020   2019
CASH FLOWS GENERATED FROM OPERATING ACTIVITIES                      
Net profit $  5,276     $  3,864     $  9,609     $  7,219  
Items not affecting cash:                      
Interest expense (income)    178        (23 )      241        (55 )
Changes in fair value related to contingent earn-out    289        237        496        379  
Lease interest expense    122        -        232        -  
Income tax expense    1,844        1,523        3,506        2,970  
Employee share purchase plan expense    46        66        46        101  
Share based compensation expense    319        303        592        503  
Depreciation and amortization    2,486        962        4,618        1,737  
Other changes in fair value    -        -        (101 )      -  
     10,560        6,932        19,239        12,854  
Change in non-cash working capital                      
Accounts receivable    (5,044 )      610        (10,722 )      5,079  
Work in process    (13,381 )      (3,349 )      (26,235 )      (2,020 )
Prepaid expenses    (480 )      (1,374 )      (192 )      (973 )
Inventory    (501 )      (147 )      (1,045 )      (1,036 )
Accounts payable and accrued liabilities    4,682        5,173        3,708        (1,338 )
Unearned contract revenue    2,877        (44 )      2,853        (2,008 )
     (1,287 )      7,801        (12,394 )      10,558  
Interest received (paid)    (300 )      (69 )      (491 )      (36 )
Income tax paid    (3,550 )      (3,547 )      (4,831 )      (5,359 )
     (5,137 )      4,185        (17,716 )      5,163  
CASH FLOWS GENERATED FROM FINANCING ACTIVITIES                      
Issuance of common shares    65,695        2,288        66,412        2,288  
Dividends    (2,259 )      (2,184 )      (4,491 )      (4,360 )
Draw (repayment) on line of credit    (26,180 )      5,000        (13,000 )      17,000  
Share repurchase    -        (37 )      -        (118 )
Payment of lease obligations    (613 )      -        (1,227 )      -  
     36,643        5,067        47,694        14,810  
CASH FLOWS USED IN INVESTING ACTIVITIES                      
Investments and loan receivable    -        -        (100 )      -  
Business acquisitions    (10,433 )      -        (10,433 )      (11,299 )
Capitalized research and development    (457 )      (529 )      (1,115 )      (1,023 )
Equipment and application software    (1,802 )      (1,312 )      (2,256 )      (1,705 )
     (12,692 )      (1,841 )      (13,904 )      (14,027 )
                       
NET CASH (OUTFLOW) INFLOW $  18,814     $  7,411     $  16,074     $  5,946  
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD    14,395        20,376        17,135        21,841  
CASH AND CASH EQUIVALENTS, END OF PERIOD $  33,209     $  27,787     $  33,209     $  27,787  
 

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.

The weighted average shares outstanding over the period presented increased largely because of equity of an equity financing in the three-month period ended March 31, 2020. The equity financing closed in February 2020 resulted in an additional 1,568,600 common shares being issued, bringing the total number of issued and outstanding common shares to 9,638,157 as at March 31, 2020. The fully diluted weighted average shares outstanding increased to 8,924,309 for the three-month period and 8,471,985 for the six-month period ended March 31, 2020 when compared to 7,857,934 and 7,870,990, respectively, for the same periods of the previous year.

Adjusted EBITDA

                   
  Three months ended   Six months ended
  March 31,    March 31,    March 31,    March 31, 
   2020    2019(1)    2020    2019(1)
Net profit $  5,276   $  3,864     $  9,609     $  7,219  
Depreciation of equipment and application software    584      540        1,156        1,035  
Depreciation of right of use asset    685      -        1,356        -  
Amortization of acquired intangible assets    1,217      422        2,106        702  
Lease interest expense    122      -        232        -  
Changes in fair value related to contingent earn-out    289      237        496        379  
Interest expense (income)    178      (23 )      241        (55 )
Other changes in fair value    -      -        (101 )      -  
Income tax    1,844      1,523        3,506        2,970  
Adjusted EBITDA $  10,195   $  6,563     $  18,601     $  12,250  
                             

Adjusted Net Profit and Adjusted EPS

                   
  Three months ended   Six months ended
  March 31,    March 31,    March 31,    March 31, 
   2020    2019(1)    2020    2019(1)
Net profit $ 5,276   $ 3,864   $ 9,609     $ 7,219
Other changes in fair value   -     -     (101 )     -
Changes in fair value related to contingent earn-out   289     237     496       379
Amortization of intangibles   1,217     422     2,106       702
Adjusted net profit $ 6,782   $ 4,523   $ 12,110     $ 8,300
Weighted average number of common shares basic   8,824,150     7,803,234     8,383,959       7,785,792
Weighted average number of common shares diluted   8,924,309     7,857,934     8,471,985       7,870,990
Adjusted EPS Basic   0.77     0.58     1.44       1.07
Adjusted EPS Diluted   0.76     0.58     1.43       1.05
                         
(1)  No restatement performed in Fiscal 2019 or 2018 figures due to the entity applying the modified retrospective approach on implementation of IFRS 16 which occurred in fiscal 2020.


                   
  Three months ended   Six months ended
  March 31,    March 31,    March 31,    March 31, 
   2020    2019(1)    2020      2019(1)
Net profit $ 5,276   $ 3,864   $ 9,609     $ 7,219
Other changes in fair value   -     -     (101 )     -
Changes in fair value related to contingent earn-out   289     237     496       379
Amortization of intangibles   1,217     422     2,106       702
Adjusted net profit $ 6,782   $ 4,523   $ 12,110     $ 8,300
Weighted average number of common shares basic   8,824,150     7,803,234     8,383,959       7,785,792
Weighted average number of common shares diluted   8,924,309     7,857,934     8,471,985       7,870,990
Adjusted EPS Basic   0.77     0.58     1.44       1.07
Adjusted EPS Diluted   0.76     0.58     1.43       1.05
                         

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.