Ottawa’s Calian Group eyes R&D investments, acquisitions in 2018

Kanata company records $15.4M profit in fiscal 2017 year, up 8.5%
Kevin Ford
Calian Group CEO Kevin Ford.

Buoyed by a recent contract renewal that could be worth $1 billion over the next 12 years, Ottawa’s Calian Group called its financial position “very strong” as it announced a jump in fourth-quarter revenues this week.

Calian (TSX:CGY) reported revenues of $72.3 million for the three-month period ending Sept. 30, an increase of five per cent over the $68.8 million it posted a year earlier. The company said its revenues in fiscal 2017 totalled $275.4 million, a slight increase over its fiscal 2016 total of $274.6 million.

CEO Kevin Ford sounded an upbeat tone in his quarterly remarks, pointing to Calian’s renewed deal to provide health-care services to the Canadian military that could extend as long as 12 years and be worth up to $1 billion. The new contract, which kicks when the current deal with the Department of National Defence expires next April, also includes members of the RCMP and Veterans Affairs.

“Once again, the team has delivered solid results for our shareholders,” Mr. Ford said in a statement. “Clearly, the recent announcement of our re-win of the DND health services contract which now includes RCMP and Veterans Affairs will be a highlight for the year.”

Calian posted a net profit of $4.3 million, a 27 per cent increase over the $3.4 million it earned in the same quarter in 2016. For fiscal 2017 as a whole, the company earned a net profit of $15.4 million, up from $14.2 million a year earlier.

“The results for this quarter continue to show a solid base of business in all of our service offerings,” chief financial officer Jacqueline Gauthier said in a statement, adding the firm improved its gross margins and boosted its net earnings “significantly” in the fourth quarter.

2018 outlook

Mr. Ford, who has overseen five acquisitions since he joined the company in 2010, said Calian will “continue to search proactively” for opportunities to acquire firms that can help it diversify its customer base and expand its service offerings.

He also said R&D spending will continue to be a priority for Calian, which employs more than 2,900 people.

“With over 64 consecutive profitable quarters, positive cash flows, a strong balance sheet and enviable backlog, our financial position is very strong, which provides the facility to continue to invest in innovation,” Mr. Ford said.

Calian operates five main service lines: health care, training, IT, engineering and manufacturing. The company said it expects earnings to continue to grow in “most or all of its service lines” in the new fiscal year but cautioned that revenues are “ultimately dependent on the extent and timing of future contract awards as well as customer utilization of existing contracting vehicles.”

Calian said it expects revenues for fiscal 2018 to be in the range of $290 million to $310 million and is forecasting a net profit of between $1.90 and $2.20 per share.