Calian Group (CGY) Q3 2024 earnings summary

Executive summary

• Achieved record Q3 revenues, with figures reported as CAD 185 million and $201 million, up 11% year-over-year, driven by all segments, especially Health and Advanced Tech.

• Adjusted EBITDA increased 22% year-over-year, with margins improving across the board; Q3-24 adjusted EBITDA reported as CAD 17.7 million and $25.7 million.

• Completed Mabway acquisition, expanding global military training capabilities and boosting Learning segment backlog; backlog reached $1.2 billion.

• Net profit for Q3 was $1.3 million (CAD 0.11 per share), down from prior year due to higher amortization and acquisition-related interest.

• On track for seventh consecutive year of double-digit revenue growth and progressing toward three-year plan targets.

Financial highlights

• Q3 revenues reached CAD 185 million/$201 million, highest ever for a third quarter.

• Adjusted EBITDA was CAD 17.7 million/$25.7 million (margin up to 12.8%); net profit for Q3 was $1.3 million, with diluted EPS of $0.11.

• Operating free cash flow for Q3 was $10 million, with a 57% conversion rate from adjusted EBITDA.

• Net debt to adjusted EBITDA ratio at 0.6x, well below 2.5x target.

• Gross margin improved to 33.4% in Q3, the ninth consecutive quarter above 30%.

Outlook and guidance

• FY2024 revenue guidance: $750–810 million, adjusted EBITDA: $86–92 million, with expectations to finish at the bottom end due to Canadian Armed Forces budget reductions.

• Guidance implies at least 14% revenue and 30% adjusted EBITDA growth year-over-year, with EBITDA margin above 11%.

• Guidance includes full-year contributions from recent acquisitions and $2 million in one-time integration costs.

• On track for seventh consecutive year of double-digit revenue growth and progressing toward $1 billion revenue target by FY 2026.