Calian officials expect to weather COVID-19 storm despite projected $8M revenue hit

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Calian chief executive and Ottawa's 2017 CEO of the Year Kevin Ford. File photo

Kanata-based Calian Group expects to take up to an $8-million hit in projected revenues over the next five to six weeks as customers cut back on services such as training and psychological assessments in the wake of the COVID-19 outbreak, company officials say.

In a conference call late Thursday afternoon to update analysts on the firm’s financial situation, CEO Kevin Ford said Calian “remains stable” and is still on track to reach its projected fiscal 2020 revenue targets of between $380 million and $410 million.

“The fact that we can stay … (within) our guidance I think is a testament to the work that we’re doing, the criticality of our services,” he said.

Calian, which employs more than 3,400 people across Canada, serves customers in four main business lines: health services, training, IT and advanced technologies. Its major clients include the Canadian military, which contracts Calian to run training exercises at bases across the country.

The company brought in revenues of more than $340 million in fiscal 2019, and last month it announced it had stretched its consecutive string of profitable quarters to 73 after booking a net profit of $4.3 million in the first quarter of fiscal 2020.

That streak could now be in jeopardy. 

Chief financial officer Patrick Houston said Thursday the company expects a revenue shortfall of between $7 million and $8 million for the period stretching from last week to the beginning of May. Calian’s health, IT and training divisions could each see a decline of up to $2 million, he said, while the advanced technologies line is expected to take at least a $1-million hit.

Still, Calian executives said they believe at least $3 million of that total will be recovered later in the fiscal year once the pandemic crisis settles down, businesses start reopening and social distancing restrictions are lifted.

“If a military exercise is postponed, there’s a good chance that that exercise will still go ahead in future quarters,” Ford said, adding the company is looking at trimming expenses through measures such as putting non-essential spending on hold and deferring planned hires.

Ford said he also expects demand for Calian’s health-care and emergency management services to ramp up as the coronavirus continues to wreak havoc and flood and fire season approaches in various parts of Canada.

“I don’t think anyone, frankly, expected something of this magnitude to hit,” he said. “I think we’re going to see a lot of organizations looking for support just to get through what’s going to be a crunch for the next six to eight weeks. 

“We believe that the combination of monitoring our expenses as well as increased sales in certain segments will help us get through this.”

In response to an analyst’s question, Ford said Calian remains committed to its aggressive strategy of growing through acquisitions despite widespread economic uncertainty.

“We’re not slowing down in any way,” he said. “If anything, we’re going to try and keep an eye out for opportunities that may arise out of this environment with companies that may be looking (at) speeding up their exit strategies or merger opportunities.”

Like many public companies, Calian has seen its share price plummet since the coronavirus outbreak began to escalate in Canada. 

The company’s shares were trading at $35 late Friday afternoon on the Toronto Stock Exchange, down from more than $45 in early March.