'What we are doing is relevant to the world': Kevin Ford Q&A

Kevin Ford
Calian CEO Kevin Ford thinks the Kanata-based firm will have to start thinking bigger when it comes to acquisitions. File photo

Its vaunted “four-piston engine” running at full throttle, Calian Group crossed its fiscal 2021 finish line in style as it cracked the half-billion-dollar revenue mark for the first time in its history.

The Kanata firm posted revenues of $518 million for the fiscal year ended Sept. 30, a 20 per cent increase from the $432 million it generated in 2020 and in line with its projections of between $500 million and $525 million. 

Sales were up across all four of Calian’s key customer segments ​– advanced technologies, health, learning and IT ​– as the firm continued its aggressive M&A push to expand its customer base and geographic footprint. 

Indeed, even as the pandemic wreaked havoc with supply chains and hampered efforts to deliver some services in person, Calian continued to thrive in fiscal 2021. 

While its net profit fell nearly 50 per cent from $20.4 million in 2020 to $11.2 million, Calian’s adjusted net profit – a metric the company likes to highlight because it takes factors such as amortization and gains from recent acquisitions out of the equation – rose substantially from $23.5 million to $37.2 million.

The firm posted record gross margins of 24 per cent as well as adjusted earnings before taxes, depreciation and amortization of nearly $52 million, up 40 per cent from a year earlier.

Meanwhile, the company continued to diversify its customer base, adding new clients in Europe and the U.S. and expanding its reach in the private sector. Government customers now account for 51 per cent of Calian’s revenues, down from 69 per cent two years ago.

Under CEO Kevin Ford’s leadership, the firm has stretched its impressive streak of consecutive profitable quarters to 80. Calian is projecting revenues to nudge the $600-million mark in fiscal 2022, with a high-end prediction of $590 million as it chases its goal of becoming a billion-dollar company.

Monday, Ford shared his thoughts on Calian reaching a new revenue milestone and what it must do to stay ahead of the curve in a post-pandemic world. 

OBJ: What does hitting the half-billion-revenue mark mean to you?

KF: We are a publicly traded company, so these milestones are important for us. When you think about the backdrop of the last two years with COVID … it’s not been easy. Those numbers are really hard (to hit) in any given day, but doing it in COVID with all the things we’ve been dealing with – supply chains, finding sources of parts, it’s been a heroic effort in so many ways from our team. The half-billion mark, that’s a big company. All of these things are (proof) to me that our brand and the company are starting to get on the radar. I'm pretty excited about it, but there’s still lots of work to be done. 

It demonstrates that what we are doing is relevant to the world. It validates to me the essential nature of what we do as Calian, whether it’s in communications, whether it’s in health care, learning, IT, cyber. As we go from a $500-million (company) to a billion, I still think that four-piston engine is the right approach. I think now we’re seeing those convergence opportunities, where we’re doing IT in health care, we’re doing cyber(security) in health care. I’m seeing the company change behaviour a bit and looking for those opportunities to work together across business units.

OBJ: Where do you see the biggest market opportunities over the next couple of years?

KF: When you look at the U.S. marketplace, we do some work in the U.S., but not a lot in the big scheme of things. That U.S. mid-market area is huge, and we’re not playing in it at all right now in any significant way. We’re starting to see some growth in the U.S., looking at where we can actually enter the U.S. in a major way. We continue to see our percentage of revenues in Europe growing. I think you’ll see over the next 12-18 months, more technology, more assets, more platforms, more geographic distribution. Once those are done, where else in the world can we consider growth opportunities? Asia-Pacific, Central/South America, there’s lots of room here to grow yet. I definitely don’t see us slowing down.

"That U.S. mid-market area is huge, and we're not playing in it at all right now in any significant way."

OBJ: You run an aggressive M&A playbook. What types of acquisitions will we see coming down the pipeline in the next few years?

KF: We probably deployed more capital (than ever) in acquisitions in the last year just because of the size of them. I tell the team, what got us to half a billion (dollars in revenue), some of that’s really good, but we’re going to have to actually think a bit differently to get to a billion. We have to really sit down and start thinking about M&A (strategy). We’ll always do tuck-unders, but to move the needle, I think we’ve got to start making probably fewer but larger acquisitions.

OBJ: What are the biggest challenges Calian faces in its bid to become a billion-dollar enterprise?

KF: I think right now the No. 1 concern is the COVID reality. I was thinking about the new (omicron) variant. A week ago, I wasn’t talking about omicron. So I do worry about my team. I think they’re tired. The world’s tired. Nobody’s having fun in this environment. We’re all just trying to get through it. I equate it to running a marathon in a hurricane and they keep moving the (finish) line. We’re running the engine hot in a global pandemic, so we’ve got to keep trying to find ways to get through this together. 

No. 2 is what I call stop, start, continue. It’s so hard as a company to stop doing something. When you start, it’s like, ‘We’ve always done that.’ But should we be? That’s going to be an ongoing discussion for us as we update our strategies. Time is a precious commodity, and we need to make sure we’re optimizing our time spent for maximum output. 

The third piece is just the realities of (hiring) talent right now. We’re seeing incredible salaries being paid to certain categories of people. Frankly, startups, companies that aren’t making money, they’re throwing around a lot of cash right now. We’re all competing for the same talent. There’s only so many tools in our kit. Talent’s a big worry for me. We can’t do anything if we don’t have great people on the bus.

OBJ: How do you win that war for talent?

KF: We talk about our core purpose a lot. We help the world communicate, learn, lead healthy lives and stay safe. I think that matters for people now. People want to make a good living but also go home at night being proud of the work that’s being done. No. 2, we’ve got to continue to talk about culture. You can always make more money, but are you going to be happy? Are you going to be in a culture that values you as an individual? No. 3, we do need to look at compensation. The one thing we don’t use enough is our equity, our publicly traded status. With two equity raises over the last couple of years, we’ve increased our share count. I think we’ve got to start looking at things like (employee share offerings) a bit more strategically to differentiate (ourselves). Our stock’s tripled in the last three years. I think trying to use equity as a bit more strategic weapon is something we’ve got to continue to look at for sure.

OBJ: Do you think your diversity of product and service offerings sometimes makes it difficult for investors and the wider market to grasp what kind of company Calian actually is?

KF: Diversity is a strength, but we’ve got to continue to find ways to simplify the story and tell all the great things that we do. I created the chief commercial officer role and (former Microsoft marketing strategist) Michele Bedford has come on board. I’ve really been working with her on (promoting Calian’s) brand. Whether it’s ground systems communications, health care for the military, training people to get ready for deployment in military settings, IT and cyber, the one thing I’m comfortable saying is customers trust us when they can’t fail. We saw that with COVID. All four pistons kept going. Everyone just kept coming back to us and we grew because there was more and more demand for the essential services we provide. We need to tap into that a bit more (in marketing efforts). It’s a work in progress. Michele’s on it and you’re going to see a lot of work on that.