Calian Group (CGY) investor relations material

Executive summary

• Q3 revenue grew 4% year-over-year to $192M, with defense solutions up 12% and strong contract momentum in Europe, UK, and Canada; ITCS continued to face headwinds.

• Defense now represents 50% of revenues, with trailing twelve-month defense revenue up 19% to $373M.

• New contract signings reached $642M in Q3, bringing the year-to-date total to over $1B and backlog to a record $1.5B, two-thirds in defense.

• Leadership changes include Chris Pogue leading the new defense and space unit and a new transition plan for ITCS leadership.

• Completed the acquisition of Advanced Medical Solutions and announced a $250M increase to the Health Care Provider Recruitment contract with DND.

Financial highlights

• Q3 consolidated revenues increased 4% year-over-year to $192M, with 9% growth in advanced tech, learning, and health, offset by a 10% decline in ITCS.

• Adjusted EBITDA for Q3 was $19M, down 5% year-over-year; margin at 9.9% (down from 10.7% last year); excluding ITCS, adjusted EBITDA grew 10%.

• Adjusted net profit for Q3 was $12M ($1.00 per diluted share), down from $13M ($1.06 per share) last year, mainly due to non-cash acquisition charges.

• Cash flow from operations was $25M, up from $14M year-over-year; operating free cash flow was $12M (63% conversion from adjusted EBITDA).

• Gross margin improved to 34.8% in Q3, marking the 13th consecutive quarter above 30%.

Outlook and guidance

• Management expects continued strong momentum in defense and space, with further clarity on new contract timing after the fall federal budget.

• ITCS segment recovery anticipated over the next couple of quarters, with ongoing strategic measures to improve profitability.

• Positive organic growth expected to continue, supported by a strong backlog and recent contract wins.

• Plans to accelerate share buybacks and renew NCIB, subject to TSX approval.

• Ongoing business review with initial outcomes expected in the fall.