Record Q1: Revenue reached CAD 208 million with adjusted EBITDA of CAD 23 million (revenue +12% YoY, +6% organic; adjusted EBITDA +28%) and the company closed the quarter with CAD 171 million in new signings and a CAD 1.4 billion backlog.
Strategic realignment and wins: Calian simplified to two segments—defense and space (~two-thirds of revenue) and essential industries (~one-third)—and highlighted strong Europe/Canada defense demand plus >CAD 35 million in space contracts (including a >CAD 30M ground-station award); essential industries grew nearly 20%, boosted by the AMS acquisition.
Balance sheet and outlook: Q1 cash from operations was CAD 7 million, net debt was CAD 102 million (net debt/adj. EBITDA 1.2x) with ~CAD 250 million available liquidity; management reiterated guidance targeting 10–15% annual revenue growth and double‑digit FY2026 revenue and adjusted EBITDA growth, with M&A the top capital priority and buybacks temporarily paused.
Calian Group (TSE:CGY) reported a record first quarter for fiscal 2026, citing strong demand in its defense and space operations, contributions from recent acquisitions, and margin expansion driven in part by cost optimization initiatives implemented late last year.
On the company’s Q1 earnings call, CEO Patrick Houston said revenue reached CAD 208 million and adjusted EBITDA totaled CAD 23 million, both described as new first-quarter highs for Calian. Revenue increased 12% year-over-year, including 6% organic growth, while adjusted EBITDA increased 28%, lifting adjusted EBITDA margin to 11%.
Houston said performance was fueled by “robust demand” across the defense and space segment and several businesses within essential industries, alongside the impact of acquisitions and operational execution. Calian ended the quarter with CAD 171 million in new signings and a CAD 1.4 billion backlog.
VP Finance Will Majic added that Q1 gross profit rose to CAD 71 million from CAD 59 million a year earlier, while gross margin increased to 34.1% from 31.8%, reflecting revenue growth, mix changes, and acquisition contributions.
In Q&A, management characterized gross margin as subject to some seasonality tied to hardware deliveries and mix, but said it expects gross margin to remain in the “low to mid thirties” in the near term.
Calian also used the quarter to introduce a simplified operating structure, moving from four reporting segments to two: defense and space and essential industries. Houston said the change is meant to better align the company with how customers buy and to bring “technology, expertise, delivery, and customer insights” together more effectively.
Under the new structure, management said defense and space represent roughly two-thirds of revenue, with essential industries representing roughly one-third. Houston said the essential industries group is focused on margin expansion while benefiting from organic tailwinds in health and energy, and he said the company expects margins to improve through the year, “exiting at double-digit levels.”
Majic noted that the adoption of the new operating structure changed how shared services expenses are allocated versus prior reporting. He emphasized the shift is a reclassification rather than an increase in overall costs, and said the company is analyzing those costs to streamline processes and eliminate redundancies through targeted efficiency initiatives.
Houston said demand trends in defense and solutions continue to build, citing sustained activity in Europe and rising demand in Canada. He described Europe as experiencing accelerated procurement decisions given “heightened and immediate security requirements,” and said Calian expects to increase investment in the region, particularly in talent, infrastructure, and technology, to scale responsibly.
In Canada, Houston said activity levels are increasing and broader plans are being developed, though he cautioned that the timing of opportunities remains difficult to predict. He discussed the expected defense industrial plan as a potential catalyst, saying it is anticipated to strengthen the link between defense spending and economic growth and to set priorities around sovereign technologies.
Houston also referenced a January announcement that Calian plans to mobilize capital from multiple sources through Calian Ventures to accelerate development and deployment of sovereign C5ISR capabilities, including co-development of new IP with Canadian small and mid-sized businesses and support from regional and federal programs.
In space, Houston described a renewed momentum in ground station activity after a period of slower growth. He highlighted two contracts signed during the quarter totaling more than CAD 35 million, including:
A contract of more than CAD 30 million with a “leading global space technology company” to design and manufacture advanced ground stations for next-generation satellite systems.
A contract with Germany’s Federal Ministry of Defense, represented by the University of the Federal Armed Forces in Munich, for an advanced full-service Q/V-band antenna ground station supporting scientific and modern military satellite communications.
Houston said the wins underscore the convergence of defense and space and support the strategic rationale for a dedicated defense and space segment.
In essential industries, Houston said segment revenue increased by “nearly 20%,” driven largely by the performance of the AMS acquisition, which he said strengthened Calian’s position as it expands in the Arctic region. He also pointed to a return to “modest but important” organic growth, led by a rebound in U.S. commercial operations after a challenging year, supported by what he described as a strengthened backlog.
When asked about cost optimization and margin expansion, Houston said steps discussed on the Q4 call helped lift profitability in some commercial businesses in Q1, with more efficiency work planned in essential industries and at the corporate level.
Majic said Calian generated CAD 7 million in cash flow from operations in Q1, up from CAD 4 million a year earlier, driven by higher profitability and partially offset by higher interest and tax payments. He also said working capital efficiency was approximately 10%, up from 8.5%, reflecting working capital acquired through recent acquisitions, and described Q1 as a seasonally higher working capital use expected to reverse later in the year.
During the quarter, Calian funded CAD 2 million in capital expenditures and CAD 18 million in acquisition-related payments, including earn-outs. Majic said this included the CAD 12 million acquisition of InField Scientific and an earn-out payment tied to the company’s August 2023 acquisition of HPT, with remaining HPT earn-out payments expected over coming quarters. Calian also returned CAD 3 million to shareholders via dividends.
As of December 31, 2025, Majic said Calian had drawn CAD 165 million on its debt facility and drew an additional CAD 34 million during Q1 to fund acquisitions, earn-outs, and general purposes. The company ended the quarter with net debt of CAD 102 million and a net debt-to-adjusted EBITDA ratio of 1.2x, which management said remains below its 2.5x threshold. Majic said available liquidity—including undrawn credit capacity, cash, and an accordion feature—totaled close to CAD 250 million.
Management reiterated its fiscal 2026 outlook, unchanged from the prior quarter. Majic said the company continues to target 10% to 15% annual revenue growth over the next several years through a mix of organic growth and acquisitions, and expects adjusted EBITDA growth to outpace revenue growth in the midterm. For fiscal 2026, Calian anticipates double-digit growth in both revenue and adjusted EBITDA versus fiscal 2025, supported by momentum in both segments, cost initiatives, and full-year contributions from AMS and InField Scientific.
On capital deployment, Majic said capex is expected to remain around CAD 10 million for the year and reiterated the dividend policy targeting 25% to 30% of operating free cash flow. He said M&A remains the company’s top capital priority, while noting Calian has “temporarily paused” its share repurchase program and redirected capital to higher-priority strategic initiatives, with openness to resuming buybacks opportunistically depending on market conditions.
Calian Group Ltd operates through four segments namely Advanced Technologies, Health, Learning, and Information Technology. It generates maximum revenue from the Health segment. The company serves health, defence, security, aerospace, engineering, AgTech, and IT industries. Its Health segment includes Clinical Services; Nursing Services; Psychological Services and Medical Property Management. The Advanced Technologies segment includes Engineering Solutions and Services; Nuclear and Environmental Services; Satcom; DOCSIS; Electronics Design and Manufacturing and Agricultural Technology.
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