Calian Reports Results for the Third Quarter

Executive Summary

• Calian Group Ltd. reported financial results for the third quarter ended June 30, 2025, showing a 4% increase in revenue to $192.2 million, driven by acquisitive growth from the acquisition of Advanced Medical Solutions (AMS) and Mabway.
• The company announced a $250 million increase to its Health Care Provider Recruitment (HCPR) contract with the Department of National Defence (DND), contributing to a record backlog of $1.5 billion.
• While revenue grew, Adjusted EBITDA declined 5% to $19 million and Adjusted Net Profit fell to $11.6 million, primarily due to lower profitability in the ITCS segment and strategic investments in the cyber business.

Key Details

• Q3 2025 Financial Performance:
  • Revenue: $192.2 million (up 4% from $185.0 million in Q3 2024).
  • Gross Margin: 34.8%.
  • Adjusted EBITDA: $19.0 million (down 5% from $19.9 million; margin decreased to 9.9% from 10.7%).
  • Adjusted Net Profit: $11.6 million (down 9% from $12.8 million).
  • Adjusted EPS (Diluted): $1.00 (down from $1.06).
  • Operating Free Cash Flow: $12.0 million (down 20% from $15.0 million).
  • Net Profit (GAAP): $0.6 million ($0.05 per diluted share), compared to $1.3 million ($0.11 per diluted share) in Q3 2024.
• Nine Months Ended June 30, 2025:
  • Revenue: $570.9 million (up 1% from $565.4 million).
  • Adjusted EBITDA: $54.2 million (down 21% from $68.4 million).
  • Adjusted Net Profit: $33.1 million (down 28% from $45.7 million).
  • Adjusted EPS (Diluted): $2.81 (down from $3.81).
  • Operating Free Cash Flow: $34.8 million (down 34% from $53.2 million).
• Contract Backlog and New Signings:
  • New contract signings in Q3 totaled $642 million.
  • Year-to-date new signings exceed $1.0 billion.
  • Total contract backlog reached an all-time high of $1.5 billion.
  • $250 million increase announced to the HCPR contract with the Department of National Defence (DND).
• Operational Updates:
  • Completed the acquisition of Advanced Medical Solutions (AMS) in May 2025.
  • Chris Pogue appointed as President, Defence & Space, effective July 7, 2025.
  • Share repurchases: 361,058 shares repurchased in Q3 for $15.9 million; 556,308 shares repurchased year-to-date for $25.2 million.
  • Company intends to renew its Normal Course Issuer Bid (NCIB) in August 2025.
• Dividends:
  • Declared a quarterly dividend of $0.28 per share.
  • Payable on September 9, 2025, to shareholders of record as of August 26, 2025.
• Liquidity and Capital Resources:
  • Net debt to Adjusted EBITDA ratio: 1.1x.
  • Cash and cash equivalents at quarter-end: $58.0 million.
  • Debt facility drawn: $141.0 million.

Notable Quotes

• Kevin Ford, CEO: “In the third quarter, our total defence solutions revenue grew by 12%, reflecting strong momentum across Europe and the U.K., as well as early signs of growing investments in Canada... Excluding the ITCS segment, which continues to experience demand headwinds and reduced profitability, we delivered a robust 9% revenue growth and a 10% increase in adjusted EBITDA. Looking ahead, we remain confident in our trajectory, as evidenced by over $1 billion in new contract signings this year, including $642 million this quarter, bringing our backlog to an all time high of $1.5 billion.”
• Patrick Houston, CFO: “In the third quarter we generated $12 million in operating free cash flow, representing a 63% conversion rate from adjusted EBITDA... We ended the quarter with a net debt to adjusted EBITDA ratio of 1.1x, leaving us considerable capital to pursue growth initiatives.”