Q4 2025 Calian Group Ltd Earnings Call

November 26, 2025

Speaker #1: Good day, and thank you for standing by. Welcome to Calian Group Q4 2025 earnings conference call. At this time, all participants are in listen-only mode.

Operator: Good day, and thank you for standing by. Welcome to Calian Group Q4 2025 earnings conference call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. Please note that today's conference is being recorded. I will now hand the conference over to your speaker host, Jennifer McCarthy, Director of Investor Relations. Please go ahead.

Speaker #1: After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press *11 on your telephone; you will then hear an automated message advising that your hand is raised.

Speaker #1: Please note that today's conference is being recorded. I will now hand the conference over to your speaker host, Jennifer McCarthy, Director of Installations. Please go ahead.

Speaker #2: Thank you, Livia, and good morning, everyone. Thank you for joining us for Calian's Q4 and year-end 2025 conference call. Presenting this morning are Kevin Ford, Chief Executive Officer, and Patrick Houston, Chief Financial Officer.

[Analyst] (Desjardins): Thank you, Livia, and good morning, everyone. Thank you for joining us for Calian's Q4 and year-end 2025 conference call. Presenting this morning are Kevin Ford, Chief Executive Officer, and Patrick Houston, Chief Financial Officer. They will present our Q4 and year-end results, as well as provide an update on defense and our future outlook. As noted on slide two, please be advised that certain information discussed today is forward-looking and subject to important risks and uncertainties. The results predicted in these statements may be materially different from actual results. As a reminder, all amounts are expressed in CAD except as otherwise specified. With that, let me turn the call over to Kevin.

Jennifer McCaughey: Thank you, Livia, and good morning, everyone. Thank you for joining us for Calian's Q4 and year-end 2025 conference call. Presenting this morning are Kevin Ford, Chief Executive Officer, and Patrick Houston, Chief Financial Officer. They will present our Q4 and year-end results, as well as provide an update on defense and our future outlook. As noted on slide two, please be advised that certain information discussed today is forward-looking and subject to important risks and uncertainties. The results predicted in these statements may be materially different from actual results. As a reminder, all amounts are expressed in CAD except as otherwise specified. With that, let me turn the call over to Kevin.

Speaker #2: They will present our Q4 and year-end results, as well as provide an update on defense and our future outlook. As noted on slide two, please be advised that certain information discussed today is forward-looking and subject to important risks and uncertainties.

Speaker #2: The results predicted in these statements may be materially different from actual results. As a reminder, all amounts are expressed in Canadian dollars, except as we turn the call over to...

Speaker #3: Thank you, Jennifer, otherwise specified.

Kevin Ford: Thank you, Jennifer, and good morning, everyone. I'm pleased to report that we closed the year on a high note. We delivered record results, the highest revenue quarter in our 43-year history, the second-highest adjusted EBITDA, and a return to positive organic growth. Following a period of slower momentum, we've turned the corner with renewed momentum. Our team's dedication and resilience have fueled a solid recovery, with both revenues and adjusted EBITDA showing year-over-year growth. Our defense solutions continue to lead the way with double-digit growth, reflecting rising sector investment and our ability to convert demand into results. We finished this year with CAD 122 million in signings, and this translated to over CAD 1 billion in net signings this year, an increase of 48% over the previous year. Shortly after year-end, we supported our assignment with a large ground system project with the leading global space company.

Speaker #3: and good morning,

Speaker #3: Everyone, I’m pleased to report that we closed the year on a high note. With that, let’s review the results: we delivered record revenue for the highest quarter in our 43-year history, and the second highest adjusted EBITDA, along with a return to positive organic growth.

Speaker #3: Slower momentum; we've turned the corner. With renewed momentum, our team's dedication and resilience have fueled a solid recovery, with both revenues and adjusted EBITDA showing growth.

Speaker #3: Year-over-year growth: Our defense solutions continue to lead the way, with double-digit growth. This reflects rising sector investment and our ability to convert demand into results. We finished this year with $122 million in signings, which translated to over $1 billion in net signings this year.

Speaker #3: An increase of 48% over the previous year. Shortly large ground system project, with a after year-end, we supported our sign with a leading global space company.

Speaker #3: This project will deliver four QV-band antennas and is a sign of our leadership in the space ground segment. Now, I'd like to take a moment to highlight the significant progress we've made in advancing our defense-focused strategy over the past year.

Kevin Ford: This project will deliver four QV band antennas and is a sign of our leadership in the space ground segment. Now, I'd like to take a moment to highlight the significant progress we have made in advancing our defense-focused strategy over the past year. This area has been a key driver of our growth and innovation, and I'm excited to share the milestones and achievements that are shaping our future in this sector. Our defense solutions now represent 50% of consolidated revenues. These revenues grew 17% year-over-year as demand accelerates across Canada, the UK, and Europe. Growth is broad-based, spanning mission-critical healthcare, manufacturing and engineering, cyber, and military training. Over the past year, our team has demonstrated agility in a rapidly shifting defense environment.

This project will deliver four QV band antennas and is a sign of our leadership in the space ground segment. Now, I'd like to take a moment to highlight the significant progress we have made in advancing our defense-focused strategy over the past year. This area has been a key driver of our growth and innovation, and I'm excited to share the milestones and achievements that are shaping our future in this sector. Our defense solutions now represent 50% of consolidated revenues. These revenues grew 17% year-over-year as demand accelerates across Canada, the UK, and Europe. Growth is broad-based, spanning mission-critical healthcare, manufacturing and engineering, cyber, and military training. Over the past year, our team has demonstrated agility in a rapidly shifting defense environment.

Speaker #3: This area has been a key driver of our growth and innovation, and I'm excited to share the milestones and achievements that are shaping our future in this sector.

Speaker #3: Our defense solutions now represent 50% of consolidated revenues. These revenues grew 17% year-over-year as demand accelerates across Canada, the UK, and Europe. Growth is broad-based, spanning mission-critical healthcare, manufacturing and engineering, cyber, and military training.

Speaker #3: Over the past year, our team has demonstrated agility in a rapidly shifting defense environment. In Q3 fiscal 2024, and into fiscal 2025, we successfully navigated $1 billion in Canadian defense cuts, while expanding our European footprint from less than $10 million in revenues in fiscal 2023 to over $65 million in fiscal 2025.

Kevin Ford: In Q3 fiscal 2024 and into fiscal 2025, we successfully navigated CAD 1 billion in Canadian defense cuts while expanding our European footprint from less than CAD 10 million in revenues in fiscal 2023 to over CAD 65 million in fiscal 2025. This adaptability not only offset domestic budget pressures, it strengthened our global presence, and set the stage for sustained growth in key markets. In fiscal 2025, we laid a strong foundation for long-term growth in defense through strategic acquisitions, operational realignment, new contracts, partnerships, and key hires. To expand our northern capabilities, we acquired AMS, strengthening our healthcare portfolio and positioning us for future federal investment in the Canadian North. This, along with our relationships with provincial and territorial governments, sets us up to pursue new contracts as northern programs develop. Shortly after year-end, we acquired Infield Scientific, enhancing our defense offerings and opening new market opportunities.

In Q3 fiscal 2024 and into fiscal 2025, we successfully navigated CAD 1 billion in Canadian defense cuts while expanding our European footprint from less than CAD 10 million in revenues in fiscal 2023 to over CAD 65 million in fiscal 2025. This adaptability not only offset domestic budget pressures, it strengthened our global presence, and set the stage for sustained growth in key markets. In fiscal 2025, we laid a strong foundation for long-term growth in defense through strategic acquisitions, operational realignment, new contracts, partnerships, and key hires. To expand our northern capabilities, we acquired AMS, strengthening our healthcare portfolio and positioning us for future federal investment in the Canadian North. This, along with our relationships with provincial and territorial governments, sets us up to pursue new contracts as northern programs develop. Shortly after year-end, we acquired Infield Scientific, enhancing our defense offerings and opening new market opportunities.

Speaker #3: This adaptability not only offset domestic budget pressures; it strengthened our global presence and set the stage for sustained growth in key markets. In fiscal 2025, we laid a strong foundation for long-term growth in defense through strategic acquisitions, operational realignment, new contracts, partnerships, and key hires.

Speaker #3: To expand our northern capabilities, we acquired AMS, strengthening our healthcare portfolio and positioning us for future federal investment in the Canadian North. This, along with our relationships with provincial and territorial governments, sets us up to pursue new contracts as northern programs develop.

Speaker #3: Shortly after year-end, we acquired InField Scientific, enhancing our defense offerings and opening new market opportunities. We also refocused our operations to align with growth opportunities, including launching a U.S.-focused subsidiary to target federal defense contracts.

Kevin Ford: We also refocused our operations to align with growth opportunities, including launching a US-focused subsidiary to target federal defense contracts. In parallel, we integrated our defense and space capabilities, forming a unified segment that combines advanced technologies with immersive training, allowing us to deliver comprehensive solutions that stand out in the market. Our defense strategy has already yielded significant contract wins, including agreements with NATO and allied countries, and a CAD 250 million expansion to our health services contract with Canadian Armed Forces. At year-end, our backlog reached CAD 1.4 billion, with CAD 1 billion in the defense sector. To support growth and innovation, we've forged new partnerships. We've launched Calian Ventures to help Canadians scale defense solutions, and signed our first partnership with Tactical to co-develop ISR software for the Canadian Armed Forces.

We also refocused our operations to align with growth opportunities, including launching a US-focused subsidiary to target federal defense contracts. In parallel, we integrated our defense and space capabilities, forming a unified segment that combines advanced technologies with immersive training, allowing us to deliver comprehensive solutions that stand out in the market. Our defense strategy has already yielded significant contract wins, including agreements with NATO and allied countries, and a CAD 250 million expansion to our health services contract with Canadian Armed Forces. At year-end, our backlog reached CAD 1.4 billion, with CAD 1 billion in the defense sector. To support growth and innovation, we've forged new partnerships. We've launched Calian Ventures to help Canadians scale defense solutions, and signed our first partnership with Tactical to co-develop ISR software for the Canadian Armed Forces.

Speaker #3: In parallel, we integrated our defense and space capabilities, forming a unified segment that combines advanced technologies with immersive training, allowing us to deliver comprehensive solutions that stand out in the market.

Speaker #3: Our defense strategy has already yielded wins, including agreements with NATO and allied countries, and a $250 million expansion to our health services contract with the Canadian Armed Forces.

Speaker #3: At year-end, our backlog reached $1.4 billion, with $1 billion in the defense sector. To support growth and innovation, we've forged new partnerships. We've launched Calian's significant contract defense solutions and signed our first partnership Ventures to help Canadian SMEs scale.

Speaker #1: a Signed memorandum of with understanding and Saab to explore collaboration in such as areas secure communications , supporting defence Canada's modernization . Finally , we strengthened our leadership team hires , including Major General Roch Peltier as regional VP , Global Defence and Security and Chris Pogue , president , Defence and Space .

Kevin Ford: We also signed a memorandum of understanding with Ericsson and Saab to explore collaboration in areas such as secure communications, supporting Canada's defense modernization. Finally, we strengthened our leadership team with key hires, including Major General Rock Peltier as Regional VP, Global Defense and Security, and Chris Vogt, President, Defense and Space. Their expertise will help us build on our momentum and pursue new opportunities. Northern modernization and sovereign space capability have the potential to reshape Calian's trajectory, positioning us to participate meaningfully in the opportunities ahead. Few companies can contribute across connectivity, cyber and digital, training, and healthcare, and we can. Our diversity isn't just a feature of the business, it's a competitive advantage. On that note, let me say a few words on the federal defense budget that was announced on 4 November 2024. Overall, we view the federal 2025 budget as positive for Calian.

We also signed a memorandum of understanding with Ericsson and Saab to explore collaboration in areas such as secure communications, supporting Canada's defense modernization. Finally, we strengthened our leadership team with key hires, including Major General Rock Peltier as Regional VP, Global Defense and Security, and Chris Vogt, President, Defense and Space. Their expertise will help us build on our momentum and pursue new opportunities. Northern modernization and sovereign space capability have the potential to reshape Calian's trajectory, positioning us to participate meaningfully in the opportunities ahead. Few companies can contribute across connectivity, cyber and digital, training, and healthcare, and we can. Our diversity isn't just a feature of the business, it's a competitive advantage. On that note, let me say a few words on the federal defense budget that was announced on 4 November 2024. Overall, we view the federal 2025 budget as positive for Calian.

Speaker #1: Their expertise will help us build on our momentum and pursue new opportunities with key modernization and sovereign space capability. Northern potential to reshape Callan's trajectory, positioning us to participate meaningfully in the ahead.

Speaker #1: Few opportunities companies can contribute across connectivity , cyber and digital and training , healthcare , and can . Our diversity isn't just a feature of the business .

Speaker #1: It's a competitive advantage. On that note, let me say a few words on defense: the federal budget that was announced on November 4th.

Speaker #1: Overall, we view the federal 2020 budget as positive for Canada. The Calian Group's defense training, along with increased Canadian Armed Forces (CAF) funding on readiness initiatives—including new commitments under Operations Reassurance and Amarna—will benefit our training and simulation business.

Kevin Ford: On the defense training side, increased CAF funding and readiness initiatives, including new commitments under Operations Reassurance and Amarna, will benefit Calian's training and simulation business. These initiatives expand Canada's operational readiness commitments abroad, driving demand for enhanced training, readiness exercises, and mission-specific preparation, areas where Calian's expertise and existing CAF contracts position us to deliver. In healthcare, the commitment to address workforce shortages across the Canadian Armed Forces, RCMP, and CBSA will increase demand for healthcare and occupational health services. Calian is well-positioned to meet this need, supporting the physical and mental readiness of Canada's public safety and defense communities. In terms of manufacturing, we are among the few companies with proven defense and space manufacturing capability, and we continue to engage with OEMs and the federal government on how best to utilize this capacity.

On the defense training side, increased CAF funding and readiness initiatives, including new commitments under Operations Reassurance and Amarna, will benefit Calian's training and simulation business. These initiatives expand Canada's operational readiness commitments abroad, driving demand for enhanced training, readiness exercises, and mission-specific preparation, areas where Calian's expertise and existing CAF contracts position us to deliver. In healthcare, the commitment to address workforce shortages across the Canadian Armed Forces, RCMP, and CBSA will increase demand for healthcare and occupational health services. Calian is well-positioned to meet this need, supporting the physical and mental readiness of Canada's public safety and defense communities. In terms of manufacturing, we are among the few companies with proven defense and space manufacturing capability, and we continue to engage with OEMs and the federal government on how best to utilize this capacity.

Speaker #1: These initiatives expand Canada's operational readiness commitments abroad , driving demand for enhanced training readiness exercises and mission specific preparation areas where expertise and side , existing CAF position us to contracts deliver in healthcare .

Speaker #1: The commitment to address workforce shortages across the Canadian Armed Forces, RCMP, and CBSA will increase the demand for healthcare and occupational health. Canyon is well needed to support the physical and mental readiness of Canada's public safety and services defence communities.

Speaker #1: In manufacturing, we are among the few companies with proven defense and space manufacturing capability, and we continue to engage with OEMs and the federal government on how best to utilize this capacity.

Speaker #1: In summary, as a trusted Canadian operational readiness partner, we provide critical solutions for national security and are well positioned to deliver on missions stemming from this budget benefit.

Kevin Ford: In summary, as a trusted Canadian operational readiness partner delivering mission-critical solutions for national security, we are well-positioned to benefit from this budget. The creation of the Defense Investment Agency signals further opportunities, though timing of contract awards remains uncertain. While implementation details are still emerging, we remain cautiously optimistic about the longer-term impact for Calian and will monitor developments closely. Before I pass it on to Patrick, I just want to provide a brief update on our ITCS segment. After several quarters of reduced profitability, we took material action in Q4 to restore performance. With the departure of the previous management team, we streamlined operations to improve efficiency, reducing resources, refocusing our core markets and products, and renewing our partner ecosystem. Most changes were implemented in Q4, so their impact was limited this period, though we expect meaningful benefits in fiscal 2026.

In summary, as a trusted Canadian operational readiness partner delivering mission-critical solutions for national security, we are well-positioned to benefit from this budget. The creation of the Defense Investment Agency signals further opportunities, though timing of contract awards remains uncertain. While implementation details are still emerging, we remain cautiously optimistic about the longer-term impact for Calian and will monitor developments closely. Before I pass it on to Patrick, I just want to provide a brief update on our ITCS segment. After several quarters of reduced profitability, we took material action in Q4 to restore performance. With the departure of the previous management team, we streamlined operations to improve efficiency, reducing resources, refocusing our core markets and products, and renewing our partner ecosystem. Most changes were implemented in Q4, so their impact was limited this period, though we expect meaningful benefits in fiscal 2026.

Speaker #1: The creation of the Defence Investment Agency signals further opportunities, though the timing of contract awards remains uncertain. While implementation details are still emerging, we remain cautiously optimistic about the longer-term impact and will monitor closely.

Speaker #1: Before I pass it on to Patrick , I just want to provide a Calian and will update on brief our Itcs segment . After several quarters of reduced profitability , we took material action in Q4 to restore performance previous management team .

Speaker #1: We streamlined operations to improve departure of efficiency , reducing resources , refocusing on core markets and products , and renewing our partner ecosystem .

Speaker #1: Those changes were implemented in Q4 , so their impact was limited this period , but we expect meaningful benefits in fiscal 26 . We also realigned the business to better reflect our major markets IT , tighter integration with our defence solutions and essential industry customers will enable us to bring more differentiated offerings to market , improve execution across the portfolio .

Kevin Ford: We also realigned the IT business to better reflect our major markets. Tighter integration with our defense solutions and essential industry customers will enable us to bring more differentiated offerings to market and improve execution across the portfolio. We're already seeing traction in mission-critical applications, including our recent contract win with the Ottawa Airport Authority. I will now turn it over to Patrick to discuss Q4 and year-end consolidated results. Patrick?

We also realigned the IT business to better reflect our major markets. Tighter integration with our defense solutions and essential industry customers will enable us to bring more differentiated offerings to market and improve execution across the portfolio. We're already seeing traction in mission-critical applications, including our recent contract win with the Ottawa Airport Authority. I will now turn it over to Patrick to discuss Q4 and year-end consolidated results. Patrick?

Speaker #1: We're already seeing traction in mission critical applications , including our recent contract win with the Ottawa Airport Authority . I will now turn it over to Patrick to discuss Q4 and year end consolidated results .

Speaker #1: Patrick .

Speaker #2: Thank you, Kevin. Q4 revenues increased 12% to $203 million, as the combined growth of 18% from advanced text learning and health was partially offset by ITCS, which saw revenues down 4%.

Patrick Houston: Thank you, Kevin. Q4 revenues increased 12% to CAD 203 million, as the combined growth of 18% from advanced techs, learning, and health was partially offset by ITCS, which saw revenues down 4%. Equivalent growth was 6% and was generated by the contributions of AMS completed this past May. More importantly, we returned to consolidated organic growth. Organic growth was 6%, driven by advanced techs, learning, and health, and partially offset by ITCS. Excluding ITCS, organic growth would have been 9%, highlighting the strength of our core operations, particularly our defense training momentum in Canada, the UK, and Europe. We continue to scale our international presence with 48% of Q4 revenues generated outside Canada, our highest quarter ever, both in terms of absolute dollars and as share of total revenue. Q4 gross margin was 34% compared to 35% in the same period last year, reflecting revenue mix.

Speaker #2: Acquisitive growth was 6% and was generated by the contributions of AMS completed this past May. More importantly, we focus on organic consolidated growth.

Speaker #2: Organic growth was 6% , driven by advanced tech , learning and returned health , and partially offset by Itcs Itcs , organic . growth would Excluding have been 9% , highlighting the strength of our core operations , particularly our defence momentum in training Canada , the UK and Europe .

Speaker #2: We continue to scale our international presence, with 48% of Q4 revenues generated outside Canada. Our highest score ever, both in terms of absolute dollars and revenue.

Speaker #2: As a share of margin total, Q4 compared to 35% in the same gross year, reflecting revenue mix of 34%. This marks our 14th consecutive quarter above 30% and the fourth highest quarterly result in the company's history.

Speaker #2: Margin Q4 adjusted EBITDA increased to $24 million, strong performance in our driven by core markets of space, defense, and healthcare. These businesses continue to demonstrate resilience and momentum, with adjusted EBITDA up 32% when excluding the lower performance in our ITCS segment.

Patrick Houston: This marks our 14th consecutive quarter above 30%, and the fourth highest quarterly margin in the company's history. Q4 adjusted EBITDA increased to CAD 24 million, driven by strong performance in our core markets of space, defense, and healthcare. These businesses continue to demonstrate resilience and momentum, with adjusted EBITDA up 32% when excluding the lower performance in our ITCS segment. Importantly, adjusted EBITDA grew 32% versus 18% revenue growth, reflecting improved operational efficiency and expanding margins. Given the ITCS underperformance, adjusted EBITDA margin stood at 11.9%, down from 13.1% for the same period last year. Now turning to full-year results. Revenues in FY25 were up 4% to CAD 774 million, a new record for Calian. It included 6% growth from acquisitions and negative 2% from organic growth.

This marks our 14th consecutive quarter above 30%, and the fourth highest quarterly margin in the company's history. Q4 adjusted EBITDA increased to CAD 24 million, driven by strong performance in our core markets of space, defense, and healthcare. These businesses continue to demonstrate resilience and momentum, with adjusted EBITDA up 32% when excluding the lower performance in our ITCS segment. Importantly, adjusted EBITDA grew 32% versus 18% revenue growth, reflecting improved operational efficiency and expanding margins. Given the ITCS underperformance, adjusted EBITDA margin stood at 11.9%, down from 13.1% for the same period last year. Now turning to full-year results. Revenues in FY25 were up 4% to CAD 774 million, a new record for Calian. It included 6% growth from acquisitions and negative 2% from organic growth.

Speaker #2: Importantly, adjusted EBITDA grew 32% versus the previous year, reflecting improved operational efficiency and expanding margins. Given the 18% revenue underperformance from ITC, adjusted EBITDA margins stood at 11.9%, down from 13.1% for the same period last year.

Speaker #2: , turning to full Now year results . Revenues in FY 25 were up 4% to 774 million . A new record for an .

Speaker #2: It included 6% growth from acquisitions and -2% from organic growth. The decrease in organic growth was primarily due to defense cuts in the first half.

Speaker #2: Delays in major space programs and uncertainty surrounding tariffs at the beginning of the year; however, these challenges began to subside, and we posted positive organic growth in the second half.

Patrick Houston: The decrease in organic growth was primarily due to defense cuts in the first half, delays in major space programs, and uncertainty surrounding tariffs at the beginning of the year. However, as these challenges began to subside, we posted positive organic growth in the second half. Adjusted EBITDA declined 15%, primarily reflecting the underperformance in ITCS. As Kevin mentioned earlier, we have addressed this in Q4. Excluding these impacts, adjusted EBITDA increased 9%, underscoring the resilience of our core business. Despite these headwinds, we maintained double-digit adjusted EBITDA margin, and extended our track record of profitable growth to 24 consecutive years. Turning to cash flow and capital deployment, in FY25, we generated CAD 45 million in cash flow from operations compared to CAD 87 million last year, primarily due to lower EBITDA, higher interest expense, and working capital returning to normalized levels.

The decrease in organic growth was primarily due to defense cuts in the first half, delays in major space programs, and uncertainty surrounding tariffs at the beginning of the year. However, as these challenges began to subside, we posted positive organic growth in the second half. Adjusted EBITDA declined 15%, primarily reflecting the underperformance in ITCS. As Kevin mentioned earlier, we have addressed this in Q4. Excluding these impacts, adjusted EBITDA increased 9%, underscoring the resilience of our core business. Despite these headwinds, we maintained double-digit adjusted EBITDA margin, and extended our track record of profitable growth to 24 consecutive years. Turning to cash flow and capital deployment, in FY25, we generated CAD 45 million in cash flow from operations compared to CAD 87 million last year, primarily due to lower EBITDA, higher interest expense, and working capital returning to normalized levels.

Speaker #2: Adjusted EBITDA declined 15%, primarily due to underperformance in ITCS. As Kevin mentioned earlier, we addressed this in Q4, reflecting the results. Excluding these impacts, adjusted EBITDA increased 9%, underscoring the resilience of our core adjusted performance.

Speaker #2: Despite these headwinds, we maintained business double-digit margins and extended our track record of profitable growth to 24 consecutive years of EBITDA. Turning to cash flow and capital deployment in FY 25, we generated $45 million in cash flow from operations.

Speaker #2: , compared to 87 million last year, primarily due to lower EBITDA, higher interest expense, and working capital. Returning to normalized levels.

Speaker #2: Importantly , we maintain working capital efficiency below 10% , consistent with year , reflecting disciplined execution . Operating free cash flow was 52 million , reflecting strong last conversion of 67% from adjusted EBITDA .

Patrick Houston: Importantly, we maintained working capital efficiency below 10%, consistent with last year, reflecting disciplined execution. Operating free cash flow was CAD 52 million, reflecting strong conversion of 67% from adjusted EBITDA. Turning to capital deployment, we used our cash and a portion of our credit facility to make CapEx investments of CAD 11 million and CAD 39 million in acquisitions, including earnouts. We paid the earnout related to our May 2024 acquisition of Mavway, reflecting the strong performance and successful integration of that business. We also provided a return to shareholders with CAD 13 million in dividends, and CAD 26 million in share buybacks. This represents the purchase of 563,000 shares, or approximately 5% of shares outstanding. In August, we renewed our NCIB, reflecting our view that Calian shares remain undervalued. We intend to continue repurchasing shares on an opportunistic basis in FY26.

Importantly, we maintained working capital efficiency below 10%, consistent with last year, reflecting disciplined execution. Operating free cash flow was CAD 52 million, reflecting strong conversion of 67% from adjusted EBITDA. Turning to capital deployment, we used our cash and a portion of our credit facility to make CapEx investments of CAD 11 million and CAD 39 million in acquisitions, including earnouts. We paid the earnout related to our May 2024 acquisition of Mavway, reflecting the strong performance and successful integration of that business. We also provided a return to shareholders with CAD 13 million in dividends, and CAD 26 million in share buybacks. This represents the purchase of 563,000 shares, or approximately 5% of shares outstanding. In August, we renewed our NCIB, reflecting our view that Calian shares remain undervalued. We intend to continue repurchasing shares on an opportunistic basis in FY26.

Speaker #2: Turning to capital deployment, we used a portion of cash and our credit facility to make CapEx investments of $11 million and $39 million in acquisitions, including earnouts.

Speaker #2: We paid the earnout related to the May 2024 acquisition of Magway, reflecting the strong performance and successful integration of that business. We also provided a return to shareholders of $13 million in dividends and $26 million in share buybacks.

Speaker #2: This represents the purchase of approximately 5% of shares outstanding. In August, we renewed our NCIB, reflecting our belief that our shares remain undervalued.

Speaker #2: We intend to continue repurchasing shares on view that opportunistic basis in FY 26 . At the same time , we are actively evaluating an opportunities across defense , space , and healthcare energy and will continue to prioritize capital towards strategic acquisitions .

Patrick Houston: At the same time, we are actively evaluating opportunities across defense, space, healthcare, and energy, and we'll continue to prioritize capital towards strategic acquisitions alongside the NCIB. In early October, we acquired Infield Scientific, a small but strategic addition that strengthens our relationship with the Royal Canadian Navy and Lockheed Martin. This expands our presence in international defense markets and positions us for future naval opportunities. Looking ahead on M&A, our pipeline remains strong. We're engaged in multiple discussions, and remain optimistic about completing several strategic transactions in FY26. Let's take a look at the balance sheet and cash availability. As of 30 September 2024, we had drawn CAD 131 million on our debt facility. During Q4, we repaid CAD 10 million on our facility as we didn't close any acquisitions and only repurchased a small amount of shares.

At the same time, we are actively evaluating opportunities across defense, space, healthcare, and energy, and we'll continue to prioritize capital towards strategic acquisitions alongside the NCIB. In early October, we acquired Infield Scientific, a small but strategic addition that strengthens our relationship with the Royal Canadian Navy and Lockheed Martin. This expands our presence in international defense markets and positions us for future naval opportunities. Looking ahead on M&A, our pipeline remains strong. We're engaged in multiple discussions, and remain optimistic about completing several strategic transactions in FY26. Let's take a look at the balance sheet and cash availability. As of 30 September 2024, we had drawn CAD 131 million on our debt facility. During Q4, we repaid CAD 10 million on our facility as we didn't close any acquisitions and only repurchased a small amount of shares.

Speaker #2: Alongside the NCI, in October, we acquired Intel Scientific, a small but strategic addition that strengthens our relationship with the Royal Canadian Navy and Lockheed Martin.

Speaker #2: This expands our presence in international defense markets and positions us for future naval opportunities. Looking ahead on M&A, our pipeline is strong.

Speaker #2: We’re actively engaged in discussions and remain optimistic about completing several strategic transactions in FY 2026. Let's take a look at the balance sheet and cash availability.

Speaker #2: As of September 30th, we had drawn $131 million on our debt and repaid $10 million on our Q4 facility. We did not close any additional facilities, and only made acquisitions. We repurchased a small amount as well. We ended the quarter with net debt representing $85 million.

Speaker #2: Adjusted EBITDA debt ratio of 1.1. This is well below our threshold of two and a half times. At the end of September, we renewed and expanded our debt facility.

Patrick Houston: We ended the quarter with net debt of CAD 85 million, representing a net debt-to-adjusted EBITDA ratio of 1.1. This is well below our threshold of 2.5x. At the end of September, we renewed and expanded our debt facility. The new three-year revolving credit facility totaled CAD 350 million, comprising a committed CAD 200 million and an accordion feature of CAD 150 million. This provides us with ample financial flexibility to support our growth strategy. As I transition into the CEO role on 1 January 2024, I want to share a few thoughts on our future direction. My focus will be on leading the next phase of growth through a refreshed strategic plan to accelerate Calian's evolution as a leading Canadian industry champion, one designed to drive long-term shareholder value. My vision centers around three objectives: targeting high-growth vertical markets, driving lean and efficient operations, and investing with discipline and purpose.

We ended the quarter with net debt of CAD 85 million, representing a net debt-to-adjusted EBITDA ratio of 1.1. This is well below our threshold of 2.5x. At the end of September, we renewed and expanded our debt facility. The new three-year revolving credit facility totaled CAD 350 million, comprising a committed CAD 200 million and an accordion feature of CAD 150 million. This provides us with ample financial flexibility to support our growth strategy. As I transition into the CEO role on 1 January 2024, I want to share a few thoughts on our future direction. My focus will be on leading the next phase of growth through a refreshed strategic plan to accelerate Calian's evolution as a leading Canadian industry champion, one designed to drive long-term shareholder value. My vision centers around three objectives: targeting high-growth vertical markets, driving lean and efficient operations, and investing with discipline and purpose.

Speaker #2: The new three year revolving credit facility totaled 350 million , comprising a committed 200 million and an accordion feature of 150 million . This with ample financial us flexibility to support our provides strategy .

Speaker #2: transition into As I the CEO role on January 1st , I want to share a few thoughts on our future direction . My focus will be on leading the next phase of growth through a refreshed plan to strategic accelerate evolution as a leading Canadian industry champion , drive long one designed to term shareholder value .

Speaker #2: My vision centers around three objectives targeting high growth vertical markets driving lean , inefficient operations , and investing with discipline and purpose . We'll begin by focusing on vertical markets with growth strong momentum , specifically defense based and industries essential strengthening and expanding our existing portfolio of products and services , which is already generated a backlog of 1.4 billion leaner , to create a more competitive organization and greater convergence unlock across our markets .

Patrick Houston: We'll begin by focusing on vertical markets with strong growth momentum, specifically defense, space, and essential industries, strengthening and expanding our existing portfolio of products and services, which has already generated a backlog of CAD 1.4 billion. To create a leaner, more competitive organization and unlock greater convergence across our markets, starting in FY26, we will reorganize into two core segments: defense and space, led by Chris Vogt, and essential industries, led by Derek Clark. This streamlined structure will enable us to move faster, seize emerging opportunities, and continue delivering solutions our customers truly value. Our next phase of investment will prioritize divesting non-core assets outside our primary vertical markets, while leveraging our track record of strong M&A to acquire businesses that strengthen our position in these core markets. Calian enters this next phase from a position of strength.

We'll begin by focusing on vertical markets with strong growth momentum, specifically defense, space, and essential industries, strengthening and expanding our existing portfolio of products and services, which has already generated a backlog of CAD 1.4 billion. To create a leaner, more competitive organization and unlock greater convergence across our markets, starting in FY26, we will reorganize into two core segments: defense and space, led by Chris Vogt, and essential industries, led by Derek Clark. This streamlined structure will enable us to move faster, seize emerging opportunities, and continue delivering solutions our customers truly value. Our next phase of investment will prioritize divesting non-core assets outside our primary vertical markets, while leveraging our track record of strong M&A to acquire businesses that strengthen our position in these core markets. Calian enters this next phase from a position of strength.

Speaker #2: in FY 26 , we Starting will reorganize into two core segments Defence and Space , led by Chris and Essential Pogue Industries , led by Derek Clark .

Speaker #2: This enable us to structure will move streamlined faster , emerging seize opportunities and continue solutions our customers delivering our next phase of truly prioritize divesting non-core outside our investment will assets vertical markets , while leveraging our track record of strong M&A to acquire businesses that strengthen our position core markets and enters this next phase from a position of strength positioned , we're well to benefit from a significant of growth and period investment by our largest customers by favorable domestic environment for Canadian companies .

Patrick Houston: We're well-positioned to benefit from a significant period of growth and investment by our largest customers, supported by favorable domestic environments for Canadian companies. To highlight our refreshed strategic direction and introduce our new leadership team, we plan to host an investor day in the spring. This event will give investors the opportunity to engage directly with our executives, and gain insight into our long-term growth plans and priorities. On that note, I want to provide some thoughts on our FY26 outlook. Looking ahead to FY26, we're optimistic about recent government commitments to defense spending. In the interest of visibility and transparency, we will not be issuing guidance as we have in the past years. Instead, we will provide a long-term view of the business and short-term directional growth indicators.

We're well-positioned to benefit from a significant period of growth and investment by our largest customers, supported by favorable domestic environments for Canadian companies. To highlight our refreshed strategic direction and introduce our new leadership team, we plan to host an investor day in the spring. This event will give investors the opportunity to engage directly with our executives, and gain insight into our long-term growth plans and priorities. On that note, I want to provide some thoughts on our FY26 outlook. Looking ahead to FY26, we're optimistic about recent government commitments to defense spending. In the interest of visibility and transparency, we will not be issuing guidance as we have in the past years. Instead, we will provide a long-term view of the business and short-term directional growth indicators.

Speaker #2: To highlight our refreshed strategic direction and introduce our new leadership team, we plan to host an Investor Day in the spring. This event will give investors the opportunity to engage directly with our executives and gain insight into our long-term growth plans and priorities.

Speaker #2: On that note, I want to share some thoughts on our FY 26 outlook. Looking ahead to FY 26, we're optimistic about recent government commitments to defense spending, as they contribute to visibility and transparency.

Speaker #2: We will not be issuing guidance as we have in the past years . Instead , provide we will long term view of the business and short term directional growth indicators over the next several years .

Speaker #2: We are targeting annual revenue growth driven by both a 10% to 15% combination of growth and strategic organic acquisitions. This aligns with our historical revenue growth of 12% over the past decade.

Patrick Houston: Over the next several years, we are targeting annual revenue growth of 10% to 15%, driven by both a combination of organic growth and strategic acquisitions. This aligns with our historical 12% revenue CAGR over the past decade. As we pursue this growth, our focus will be on enhancing EBITDA, free cash flow, and return on invested capital by prioritizing high-growth verticals, streamlining operations, and investing with discipline. Accordingly, we aim for adjusted EBITDA expansion as we deliver top-line growth. For FY26 specifically, based on our existing business and recent developments, we expect double-digit growth in both revenue and adjusted EBITDA relative to FY25. This positions us at the low end of our long-term growth target range. This outlook is supported by the momentum we've displayed in Q4 in our defense and space and essential industry segments, and the full-year contributions from recent AMS and Infield Scientific acquisitions.

Over the next several years, we are targeting annual revenue growth of 10% to 15%, driven by both a combination of organic growth and strategic acquisitions. This aligns with our historical 12% revenue CAGR over the past decade. As we pursue this growth, our focus will be on enhancing EBITDA, free cash flow, and return on invested capital by prioritizing high-growth verticals, streamlining operations, and investing with discipline. Accordingly, we aim for adjusted EBITDA expansion as we deliver top-line growth. For FY26 specifically, based on our existing business and recent developments, we expect double-digit growth in both revenue and adjusted EBITDA relative to FY25. This positions us at the low end of our long-term growth target range. This outlook is supported by the momentum we've displayed in Q4 in our defense and space and essential industry segments, and the full-year contributions from recent AMS and Infield Scientific acquisitions.

Speaker #2: As we pursue this growth , our focus will be on enhancing EBITDA , free cash flow and return on invested capital by growth prioritizing high verticals , streamlining operations investing , and with discipline .

Speaker #2: Accordingly , we aim adjusted for EBITDA expansion as we deliver top line growth for FY 26 . Specifically based on our existing business and recent developments .

Speaker #2: We expect double digit growth in both revenue and adjusted EBITDA . Relative to 25 . This positions us FY at the low end of our long term growth target range .

Speaker #2: This outlook supported by is the displayed in we've momentum Q4 . In our defence and space , and essential industry segments , and the full year contributions from Racing AMS and in-field scientific acquisitions M&A we complete incremental , future terms of capital would be in expect deployment .

Speaker #2: We plan on maintaining capital expenditures in the $10 million to $11 million range, supporting both targeting operations and growth core initiatives while ensuring our working capital usage remains aligned with our objectives.

Patrick Houston: Future M&A we complete would be incremental. In terms of capital deployment, we expect working capital usage to remain aligned with revenue growth. We plan on maintaining CapEx in the CAD 10 to 11 million range, supporting both core operations and targeting growth initiatives. Our dividend policy remains unchanged, with a payout target of 25% to 30% of operating free cash flow, underscoring our commitment to shareholder value while preserving flexibility for strategic investments. M&A will continue to be our primary use of cash as we expand our capabilities and market reach. We'll also evaluate share repurchase on an opportunistic basis, taking market conditions and capital priorities into account. Before we begin the question period, I want to let everyone know that Kevin will share some parting words afterwards, so please remain online until the end. With that, Livia, I'd like to open the call to questions.

Future M&A we complete would be incremental. In terms of capital deployment, we expect working capital usage to remain aligned with revenue growth. We plan on maintaining CapEx in the CAD 10 to 11 million range, supporting both core operations and targeting growth initiatives. Our dividend policy remains unchanged, with a payout target of 25% to 30% of operating free cash flow, underscoring our commitment to shareholder value while preserving flexibility for strategic investments. M&A will continue to be our primary use of cash as we expand our capabilities and market reach. We'll also evaluate share repurchase on an opportunistic basis, taking market conditions and capital priorities into account. Before we begin the question period, I want to let everyone know that Kevin will share some parting words afterwards, so please remain online until the end. With that, Livia, I'd like to open the call to questions.

Speaker #2: Our policy remains unchanged, with a payout target of 25% to 30% of operating free cash flow, underscoring our commitment to shareholders while preserving value.

Speaker #2: Flexibility for strategic M&A will continue to be our primary use of cash investments as we expand capabilities and market reach. We'll also evaluate share repurchase on an opportunistic basis, taking market conditions and capital priorities into account.

Speaker #2: Before we begin the question period, I want to let everyone know that Kevin will share his parting words afterwards. So please remain online until the end.

Speaker #2: And with that, I'd like to open the call to questions.

Speaker #3: you

Speaker #3: . Ladies and gentlemen , as a ask a question , you will need to press reminder to star one . one on your telephone and wait for your name to be announced .

Operator: Thank you. Ladies and gentlemen, as reminded, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, simply press star 11 again. Please stand by while we compile the Q&A master. Now, first question coming from the line of Doc Taylor with Ken Cornell and is now open.

Speaker #3: To withdraw your question , simply press star one one again . Please stand by while we compile the Q&A . Mr. . Now , first question coming from the line of Doug Taylor with Canaccord .

Speaker #3: Your line is now open.

Speaker #4: Yes . Thank you . Good morning . I appreciate the comments you just made as it relates to double digit expected revenue growth in adjusted EBITDA in 2026 .

Doug Taylor: Yes, thank you. Good morning. I appreciate the comments you just made as it relates to double-digit expected revenue growth and adjusted EBITDA in 2026. I want to just unpack a little bit or talk about some of the factors that build up to that. Maybe I'll start by asking if you could speak a little bit more, give us some more color about the recent antenna contract, any more specifics you can provide, size, timing, and contribution to this upcoming year.

Speaker #4: I want to unpack a little bit and just talk about some of the factors that build up to that. Maybe I'll start by asking if you could speak a little more and give us some more color about the recent antenna contract.

Speaker #4: Any more specifics you provide regarding size, timing, and contribution to this upcoming year?

Speaker #2: Yeah , I think it's a strong win for the team , showing kind of continued growth in that segment . It's exceeds 30 million , Doug .

Patrick Houston: Yeah, I think it's a strong win for the team, showing kind of continued growth in that segment. It exceeds CAD 30 million, Doug, and it's going to be delivered over the next 24 to 28 months, sort of. I think we'll start to see some contributions this year, and then a good portion of that into next year.

Speaker #2: And it's going to be delivered over the 24 to 28 months, sort of. So next, we'll start to I think see some contributions this year.

Speaker #2: And this good portion of that will carry into the next year.

Speaker #4: Okay . Also , I relates mean , as it to , you know , the outlook you've provided , you know , you the the dramatic , you know , budget referenced passage by the Canadian government recently .

Doug Taylor: Okay. Also, I mean, as it relates to the outlook you've provided, you referenced the dramatic budget passage by the Canadian government recently. I mean, understanding that you've said that you don't expect the—there's still uncertain timing as it relates to the new contract awards. I mean, can you talk about what you've factored into that assumption in terms of wins or expansions of your programs of record with the Canadian government, and the military?

Speaker #4: I mean , understanding you've said that that you don't the expect there's still uncertain , uncertain timing as it relates to the , you know , new contract Can you talk about what awards .

Speaker #4: You've factored into that assumption in terms of wins or your expansions of programs of record with the Canadian government and the military.

Speaker #2: I mean ,

Speaker #2: we're very optimistic about , you know , ? just the Yeah , Canada is making right now . investment that think the level of discussions and opportunities is probably the highest it's ever been .

Patrick Houston: Yeah, I mean, we're very optimistic about just the investment that Canada is making right now. I think the level of discussions and opportunities is probably the highest it's ever been. I think we've been cautious about building a lot of that into next year. What we've tried to do is forecast the things we know that are happening, but we're certainly pursuing a lot of opportunities, which I think would be incremental. I think a lot of these are longer-term ones and much significant opportunities. Certainly update the market as those come to fruition, but certainly optimistic about the change in Canada and the investment profile.

Speaker #2: we've been cautious I think building a lot of that into next year . I think tried to do is forecast the things we know that are happening , but we're certainly , you know , a lot of pursuing what we've opportunities , which I think would be incremental .

Speaker #2: I think a lot of these terms are longer ones and much more significant opportunities. So certainly update the market as those come to fruition.

Speaker #2: But certainly, there is optimism in Canada regarding the investment profile.

Speaker #1: And this is I think going to be an ongoing dialogue . We're waiting the defence Industrial Strategy is now , you know , formulated with being to how to how market verticals .

Kevin Ford: Doug, it's Kevin. I think this is going to be an ongoing dialogue. We're waiting—the defense industrial strategy is now being formulated with regard to how and the market verticals that will be a focus for the federal government if this increased defense spend. We're looking forward to seeing that. We've had lots of discussion with governments. For my opening comments, though, I think from a Canadian perspective, we're very well positioned to support many different aspects of this new agenda. Now it's a question of timing and pace of that investment to get to the street.

Speaker #1: That'll be a focus for the federal government with this increased defense spending. So we're looking forward to seeing that. We've had lots of discussions with the government in my opening comments.

Speaker #1: I think, you know, from a Canadian perspective, we're very well positioned to support many different aspects of this new agenda.

Speaker #1: And now it's a question of timing and pace of that investment to get to the street.

Speaker #4: . Perhaps Understood one one more for me in the comments . You made as it relates to the ITC's unit , which is going to form part of the essential industries business , I believe the realignments that you've executed on in the quarter , how should we think about , you know , what the benefits are from those changes , what those should look like , how and when you think they manifest .

Doug Taylor: Understood. Perhaps one more for me. In the comments you made as it relates to the ITCS unit, which is going to form part of the essential industries business, I believe, the realignments that you've executed on in the quarter, how should we think about what the benefits are from those changes, what those should look like, how and when you think they manifest, and then just more broadly, your expectations for the ITCS business within that new unit going into this year as it relates to organic performance?

Speaker #4: And then just , you know , more broadly , you know , your expectations for for the ITC's business within that unit , you know , going into this year as it to relates new organic performance .

Speaker #2: combination That was a of a lot of things we did in Q4 . One of them was looking at the cost base and making sure it's aligned .

Speaker #2: So, you know, those measures were taken, and I expect that to be a positive contributor to EBITDA going into next year.

Patrick Houston: Yeah, it was a combination of a lot of things we did in Q4. One of them was looking at the cost base and making sure it's aligned. Those measures were taken, and I expect that to be a positive contributor to EBITDA going into next year. We also realigned some of the assets into our defense portfolio, which I think we'll see renewed momentum. I think that's going to be a strength for us going into the year, and the remaining of the assets is essential industries, as you said. I think it's just been renewing the leadership team. We had some departures there, but we're confident about the team we have and the outlook, and we're expecting a better year out of our IT product portfolio going into 2026.

Speaker #2: We realigned some of the assets in our defense portfolio, which I think will give us renewed momentum. I believe that's going to be a strength for us going into the year and for the remainder of our assets essential to the industries.

Speaker #2: As you said , and I think it's just been , you know , renewing the leadership team . We had some departures there , but confident about the team .

Speaker #2: We have a positive outlook and we’re expecting a better performance out of our IT product portfolio going into 2026.

Speaker #4: Okay . I'll pass the line . But before I do , Kevin , I wait comments for your at the end . But I did want to take the to to congratulate you opportunity on what you've built here so far .

Doug Taylor: Okay. I'll pass the line, but before I do, Kevin, I'll wait for your comments at the end. I did want to take the opportunity to congratulate you on what you've built here so far, and wish you well on your future endeavors.

Speaker #4: Wish you well on your future endeavors and endeavors.

Speaker #1: Yeah . Thanks , Doug . I appreciate that and I appreciate all your support over the years . It's been it's been great to get to know you .

Speaker #1: And I also appreciate all the dynamics of comments and performance you've shared on calling over the years. You're one of our few analysts who has actually seen some of what we do live.

Kevin Ford: Yeah, thanks, Doug. Appreciate that. I appreciate all your support over the years. It's been great to get to know you, and also appreciated all the dynamic performance comments you've had on Calian over the years. You're one of our few analysts who actually see some of what we do live. I appreciate those comments.

Speaker #1: So I appreciate those comments.

Speaker #4: Cheers , Kevin .

Speaker #3: Thank you. Our next question comes from the line of Stephanie Price with CIBC. Your line is now open.

Doug Taylor: Cheers, Kevin.

Operator: Thank you. Our next question coming from the line of Stephanie Price with CIBC. Your line is now open.

Speaker #5: Good morning, Kevin. I'll echo the congrats on the retirement. Maybe just focus back in on the ITC's business for just a second.

Stephanie Price: Good morning, Kevin. I'll echo the congrats on the retirement. Maybe we could just focus back in on the ITCS business for just a second. I know that in the US, we're seeing some weaker demand. How should we kind of think about the US ITCS business at this point?

Speaker #5: I know that the US was seeing some weaker demand . How should we kind of think about the US ? ITC's at this point business ?

Speaker #2: Good morning Stephanie . We had yeah , the first half was soft for sure in our US business . I think we started to good see some signs towards the end of the year .

Patrick Houston: Good morning, Stephanie. Yeah, the first half was soft for sure in our US business. I think we start to see some good signs towards the end of the year. We're entering with a backlog that's significantly higher than it was last year. I think some of that momentum we saw towards the end of the year is setting us up for a better year this year. I think early signs are better than this time last year, but we're trying to be conservative here and just kind of build back the profitability in the ITCS here over several quarters.

Speaker #2: We're entering the back with a backlog that's significantly higher than it was last year . So I think some of that momentum we saw towards the end of the year , I think is setting us up for a better year this year .

Speaker #2: So, I think early signs are better than this time last year. But we're trying to be conservative here and just focus on building back the profitability.

Speaker #2: It's year over several quarters.

Speaker #5: Okay. Thank you. And then you mentioned targeting high-growth vertical markets. I think there was a comment focusing on the U.S. subsidiary to target federal defense.

Stephanie Price: Thank you. You mentioned targeting high-growth vertical markets, and I think there was also a comment around a US-focused subsidiary to target federal defense. Just curious how much US defense work you do right now and how you think about the US opportunity here around the defense business.

Speaker #5: Just curious how much U.S. defense work you do right now and how you think about the U.S. opportunity here around the defense business.

Speaker #2: limited It's right now . I think our the we're seeing convergence , I think in the US is the combination of our space and defense pedigree .

Patrick Houston: It's limited right now. I think the convergence we're seeing in the US is the combination of our space and defense pedigree. I think that's probably the place where we can make progress the fastest. I think we do have some unique propositions and solutions in space, specifically to the defense customer. That's where we're focusing right now, and we're optimistic that we can make some progress here in the next couple of years.

Speaker #2: That's probably the place where I think we can make progress the fastest. I think we do have some unique propositions and solutions, specifically for the defense customer; that's where we're focusing.

Speaker #2: Right now, we're optimistic that we can make some progress here in the next couple of years.

Speaker #5: Great . Thank you . And then just maybe one final one from me , just in terms of the announcement , you put out a few weeks ago about a special committee looking at looking at potential divestitures in the portfolio curious about if review .

Stephanie Price: Great, thank you. Maybe one final one for me, just in terms of the announcement you put out a few weeks ago about a special committee looking at potential divestitures in the portfolio review. Just curious if you have an update on timeline for that and how we should be thinking about what that committee's looking at here.

Speaker #5: You have an on-timeline for the update, and how we should be thinking about what that committee is looking at here.

Speaker #2: Yeah, lots of activity going on there. I think that will continue here into the balance of this year and into early 2026.

Speaker #2: Obviously, I think there is certainly motivation to just, you know, do the work and come to a conclusion on those things. So I would say probably early 2026 would be the best timing.

Patrick Houston: Yeah, lots of activity going on there. I think that'll continue here into the balance of this year and into early 2026. Obviously, I think certainly motivation to just do the work and come to a conclusion on those things. I would say probably early 2026 would be the best timing, but we'll probably update that on Q1 in mid-February.

Speaker #2: We'd probably update that in Q1, in mid-February.

Speaker #5: Thank you very much.

Speaker #2: Thanks , Stephanie .

Speaker #3: Thank you. Our next question comes from the line of Paul Treiber with RBC Capital Markets. Ellen, you are now open.

Stephanie Price: Great. Thank you very much.

Patrick Houston: Thanks, Stephanie.

Operator: Thank you. Our next question coming from the line of Paul Treiber with RBC Capital Markets. Your line is now open.

Speaker #6: Thanks so much . Good morning . Just a quick follow up . Just on the strategic review . You called out a couple of times , Noncore areas , what specifically do you see as non-core going forward ?

Paul Treiber: Well, thanks so much. Good morning. Just a quick follow-up. Just on the strategic review, you called out a couple of times non-core areas. What specifically do you see as non-core going forward?

Speaker #2: I think what knit together for Carlin is kind of mission-critical solutions for customers that value that. I think that's been the one.

Patrick Houston: I think what we've knit together for Calian is kind of mission-critical solutions for customers that value that. I think that's been the one. If you think defense, space, healthcare, energy, these are markets that really value what we bring. We've been doing it for 25 years. I think it's probably one of our biggest differentiating points that Calian has. We've earned that for decades. I think that's what's core to kind of everything we do at Calian. You'll see us knitting that together going forward and really focusing there, putting a lot of our investment towards there. I think you've seen the momentum in that business here in the second half of this year. When we talk about core, that's what we're talking about. Lots of solutions within that to those customer sets, but those are our core markets.

Speaker #2: If you think defense , space , healthcare , energy , you know , these are markets that value really what we We've been doing it for 25 years .

Speaker #2: I bring . think it's probably one of our biggest differentiating points that Callaghan has . We've earned that for for decades . So I think that's what's core to kind of everything we do at Carlin .

Speaker #2: I think you'll see knitting that together as we move forward and really focusing there, putting a lot of investment towards that. And I think you've seen the momentum in business here that lasted in the second half of, I think, when we talk about this year.

Speaker #2: what we're talking about . You know , lots of solutions within that to those customer sets . But but those are our core .

Doug Taylor: Okay. Your outlook for 2026, it's helpful, that high-level outlook. What do you see as the largest potential drivers of upside to your outlook? Conversely, what are potential risks to your outlook at this point?

Paul Treiber: Okay. Your outlook for 2026, it's helpful, that high-level outlook. What do you see as the largest potential drivers of upside to your outlook? Conversely, what are potential risks to your outlook at this point?

Patrick Houston: I think it's probably the same answer to both. I think the defense spending is always—I think the trajectory and the momentum is very encouraging. I think that's positive both in Europe and Canada for us. I think trying to nail the timing on some of these things is always difficult. They're big opportunities, they can move, and that can have a significant impact. I think that's where we're trying to be cautious, but at the same time, the team's motivated to go and make some of these opportunities happen.

Speaker #2: I think that's positive both in Europe and Canada. For us, I think trying to nail the timing on some of these things is always difficult.

Speaker #2: The big opportunities, and they can move, and that can have a significant impact. So I think that's where we're trying to be cautious.

Speaker #2: But at the same time, you know, teams are motivated to go in and make some of these opportunities happen.

Speaker #6: And then with the Canadian federal budget , the , you know , there have been earlier this year procurement delays . Now with the budget out , the how quickly do you see procurement normalizing it ?

Doug Taylor: With the Canadian federal budget, there have been earlier this year procurement delays. Now with the budget out, how quickly do you see procurement normalizing? Should it be quite rapid in terms of maybe one to two quarters, or could it take longer than that?

Paul Treiber: With the Canadian federal budget, there have been earlier this year procurement delays. Now with the budget out, how quickly do you see procurement normalizing? Should it be quite rapid in terms of maybe one to two quarters, or could it take longer than that?

Speaker #6: Should it be quite rapid in terms of, or could it take 1 to 2 quarters, longer than that?

Speaker #1: Yeah , it's a good question , Paul . From my viewpoint . And I've done this for two years around defense . The this this alignment that we're seeing from a budget perspective in the context of investing in defense , obviously very positive .

Kevin Ford: Yeah, it's a good question, Paul. From my viewpoint, and I've done this 42 years around defense, this alignment that we're seeing from a budget perspective in the context of investing in defense is obviously very positive. The increase in the Defense Investment Agency is very positive. What we're looking at, as I mentioned, is the industrial base and then the timing of the procurements. There is significant expenditure in the short term that's been projected, and now it's just a matter of pushing that through the procurement system. From my viewpoint, I think in the next quarter, two quarters max, we'll have a really good understanding of the pace and focus areas for that investment, and we'll be better positioned to answer that question. We're very excited, by the way, about this.

Speaker #1: The creation of the Defense Investment Agency , very positive . So what we're looking at is , as I mentioned , is the industrial base .

Speaker #1: And then the timing of procurements, you know, there's significant expenditure in the short term that's been projected. And now it's just a matter of pushing that procurement system.

Speaker #1: through the So from my viewpoint , in the I think next quarter , two quarters max , we'll have a really good understanding of the pace focus and areas for that investment , and we'll be better positioned to answer that question .

Speaker #1: We're very excited , by the way , about this . We think this is a , you know , transformational for the opportunity for the Department of National Defense , but also for Canadian industry .

Kevin Ford: We think this is a transformational opportunity for the Department of National Defense, but also for Canadian industry. We're a leader in that industry, so we're very excited about where this is, and we just want a bit more time. It'll give us some of the specifics around the timing, around how fast this again is going to be hitting the industry with regard to their focus and vertical markets that they want to see us grow in Canada.

We think this is a transformational opportunity for the Department of National Defense, but also for Canadian industry. We're a leader in that industry, so we're very excited about where this is, and we just want a bit more time. It'll give us some of the specifics around the timing, around how fast this again is going to be hitting the industry with regard to their focus and vertical markets that they want to see us grow in Canada.

Speaker #1: And we're a leader in that industry . So we're very excited where this is . And about we just want to , you know , a bit more time will give us some around the specifics timing , around how fast this , again , be is going to hitting the industry with regard to their focus on vertical markets that they want us grow to see in Canada .

Speaker #6: for taking the Thanks And questions . congrats on the retirement . Kevin .

Speaker #1: Yeah, thanks. Thanks a lot.

Doug Taylor: Okay, thanks for taking the questions, and congrats on the retirement, Kevin.

Paul Treiber: Okay, thanks for taking the questions, and congrats on the retirement, Kevin.

Speaker #3: Thank you. Next question comes from the line of Anwar Parra with Desjardins. Your line is now open.

Kevin Ford: Yeah, thanks. Thanks, Paul.

Operator: Thank you. Our next question coming from the line of Enwar Qariyah with Desjardins. Your line is now open.

Speaker #7: Yes . Good morning Good Patrick . Kevin . If we can come back on the key highlights from the federal budget , obviously pretty positive .

[Analyst] (Desjardins): Yes. Good morning, Patrick. Good morning, Kevin. If we can come back on the key allies from the federal budget, obviously pretty positive. We've seen CAD 20 billion that's going to be spent over the next five years, with hiring, so quite positive. There was also an interesting comment about hiring on RCMP and CBSA officers. Could you, given your strong relationship with RCMP, do you also foresee some opportunity outside the CAF?

Benoit Poirier: Yes. Good morning, Patrick. Good morning, Kevin. If we can come back on the key allies from the federal budget, obviously pretty positive. We've seen CAD 20 billion that's going to be spent over the next five years, with hiring, so quite positive. There was also an interesting comment about hiring on RCMP and CBSA officers. Could you, given your strong relationship with RCMP, do you also foresee some opportunity outside the CAF?

Speaker #7: seen a 20 billion that's going We've spent over the to be next five years . So with hiring with so quite positive . But there was interesting also comment about the hiring on and CBSA RCMP officer .

Speaker #7: So could you . Given your strong relationship with RCMP , do you see also foresee some outside opportunity the CAF ?

Speaker #2: RCMP has Yeah , I think been a customer of ours for a long time between healthcare and IT and other solutions . So I think for sure , I think they're going to have a big growth the next momentum here in couple of years .

Patrick Houston: Yeah, I think RCMP has been a customer of ours for a long time between healthcare, IT, and other of our solutions. I think for sure, I think they're going to have a big growth momentum here in the next couple of years. I think it's a key part of Canada, the RCMP. We're optimistic to kind of work with them in a greater extent in the next couple of years.

Speaker #2: it's a I think it's a key part of Canada . The RCMP . we're So optimistic to kind of work with them in a greater extent in the next couple of years .

Speaker #1: And I think Patrick , to Patrick's point , you know , increase size and the scope that in we just the play in supporting and border services and defense , RCMP will require personnel this and personnel for us about training .

Kevin Ford: I think to Patrick's point, just the increase in size and the scope that we play in supporting RCMP and border services and defense, this will all require personnel. Personnel for us is about training, it's about healthcare. Again, I think we're uniquely positioned to help them in that capacity building that's going to be required to meet the new mandates.

Speaker #1: It's about health care . So is it's I think we're uniquely positioned to help them in that capacity building . That's going to be new required to meet the mandates .

Speaker #7: And just in okay, in terms of organic growth for the fiscal year, it was 26. Very nice to see the recovery in Q4.

[Analyst] (Desjardins): Okay. Just in terms of organic growth for fiscal year 2026, it was very nice to see the recovery in Q4. Given fiscal year 2025, it's been more challenging. How should we be thinking about organic growth going overall in fiscal year 2026? Could we see something stronger than typical mid-single digit, given you might be facing kind of an easy comparison?

Benoit Poirier: Okay. Just in terms of organic growth for fiscal year 2026, it was very nice to see the recovery in Q4. Given fiscal year 2025, it's been more challenging. How should we be thinking about organic growth going overall in fiscal year 2026? Could we see something stronger than typical mid-single digit, given you might be facing kind of an easy comparison?

Speaker #7: So given fiscal year 25 , it's been more challenging . How should we be about organic growth going overall in year 26 ? fiscal Could see could we something than stronger typical mid-single digit given you might be facing kind of an easy ?

Speaker #2: I think the guidance or

Speaker #2: the growth outlook we gave kind of assumes kind of mid to single digit organic growth with some acquisition contribution from AMS and Enfield .

Patrick Houston: I think the guidance or the growth outlook we gave kind of assumes kind of mid-single digit organic growth, with some acquisition contribution from AMS and Infield. That's what our base outlook is right now.

Speaker #2: That's what our right now outlook is comparison. So, okay.

Speaker #7: Perfect. And Pat, you mentioned that you have a busy pipeline. Obviously, you are well positioned for fiscal year 2026. Any color about more of the verticals or regions that are most interesting these days on your side?

[Analyst] (Desjardins): Okay. Perfect. M&A path, you mentioned that you have a busy pipeline, obviously well-positioned for fiscal year 2026. Any more color about the verticals or region that are most interesting these days on your side?

Benoit Poirier: Okay. Perfect. M&A path, you mentioned that you have a busy pipeline, obviously well-positioned for fiscal year 2026. Any more color about the verticals or region that are most interesting these days on your side?

Speaker #2: We're spending a lot of time on defense and in space, trying to find some complementary assets there to enhance the capabilities we have.

Speaker #2: I got a lot of momentum there. So, we're thinking we've like, let's make acquisitions and try to drive the synergy out of them.

Patrick Houston: We're spending a lot of time in defense and space, trying to find some complementary assets there to kind of the capability we have. I think we've got a lot of momentum there. We're trying to say, let's make acquisitions and try to drive the synergy out of them. I think that's where we're spending most of our time, and we've got some good candidates in the pipeline. I'm optimistic about completing some deals here.

Speaker #2: So I think that's where we're spending most of our time, and we've got some good candidates in the pipeline. So I'm optimistic about completing some.

Speaker #1: Then, as that, the ventures complement to...

Speaker #1: program , led by Chris is exciting for us . It's new . It's about us deals here . now taking a position as a leader in the defence community here in Canada to engage small , medium in the enterprises agenda .

Kevin Ford: As a complement to that, the ventures program led by Chris is exciting for us. It's new. It's about us now taking a position as a leader in the defense community here in Canada to engage small-medium enterprises in the defense agenda with increased spending, and giving access to not only capital, but to market reach both in Canada and globally. I think as we go forward between organic growth, M&A growth, and our ventures program, again, I think we're uniquely positioned to support what Canada wants to do in the context of increasing our sovereign capability.

Speaker #1: increased With spending and giving access to not capital but to only market reach both in Canada and globally . So I think as we go forward between organic growth , M&A growth and our ventures program , again , I think we're uniquely positioned to to support what Canada wants to do in context of sovereign increasing our .

Speaker #7: Okay . Thank you

Speaker #7: For the time, gentlemen's capability.

Speaker #1: Thanks .

[Analyst] (Desjardins): Okay, thank you very much for the time, Kevin.

Benoit Poirier: Okay, thank you very much for the time, Kevin.

Speaker #3: Thank you . And there are no further questions in the queue at this time . I will now turn the over to call back Mr. Kevin Ford for any closing .

Kevin Ford: Thanks, everyone.

Speaker #3: remarks

Speaker #1: Thank you . Olivia . Appreciate your efforts today . Considering this is my last quarter CEO . You know , as I reflect on 15 years here with this remarkable company , including the past ten , as CEO , I am still I'm filled with gratitude and pride .

Operator: Thank you. There are no further questions in the queue at this time. I will now turn the call back over to Mr. Kevin Ford for any closing remarks.

Kevin Ford: Thank you, Olivia. I appreciate your efforts today. Considering this is my last quarter as CEO, as I reflect on 15 years here with this remarkable company, including the past 10 as CEO, I'm filled with gratitude and pride. When I first joined, Calian was a promising Canadian business with ambitious goals. I vividly remember opening the TSX in April 2016 and being asked during a live BNN interview, why haven't I heard of you, and why aren't you bigger? Those questions fueled my determination to grow and transform Calian. One of my primary objectives as CEO was to drive growth. Since 2015, we have tripled our revenues from CAD 242 million to CAD 774 million in 2025. I also set out to diversify our company by geography, customer base, and offerings. We've evolved from a Canadian-focused business to a global enterprise, with close to half of our operations now outside of Canada.

Speaker #1: When I first joined, John was as a promising Canadian business with ambitious goals. I vividly remember the opening of the TSX in April 2016.

Speaker #1: And being asked during an interview, "You know why I heard of you? Why aren't you bigger?" Questions fueled by your determination to...

Speaker #1: Calian Group, one of my primary objectives as CEO was to drive growth. Since then, we have tripled our revenues from $242 million in 2015 to $770 million in 2025.

Speaker #1: I also set out to diversify our company by geography , base and offerings customer . We've evolved Canadian focused from a business to a global enterprise with half of our close to operations now outside Canada of .

Speaker #1: Our revenue shift has mixed our revenue mix from predominantly government clients to a balanced split between government and commercial customers. Additionally, we have transitioned from a services-based company to a solutions provider, with 25% of our revenues now coming from products.

Kevin Ford: Our revenue shifted from predominantly government clients to a balanced split between government and commercial customers. Additionally, we transitioned from a services-based company to a solutions provider, with 25% of our revenues now coming from products. This transformation is a testament to the dedication, talent, and resilience of our entire team, not the work of one individual. Today, Calian stands as a market leader in mission-critical solutions with a stronger brand and a diversified presence across geographies, customers, and offerings. I am deeply grateful to our employees whose commitments and creativity have driven our success, to our customers and partners, and want to thank you for your trust and collaboration, to our shareholders, our analysts. Your support has enabled us to pursue bold strategies and deliver sustained growth. Finally, to our board of directors, my thanks for continued support during this transformation.

Our revenue shifted from predominantly government clients to a balanced split between government and commercial customers. Additionally, we transitioned from a services-based company to a solutions provider, with 25% of our revenues now coming from products. This transformation is a testament to the dedication, talent, and resilience of our entire team, not the work of one individual. Today, Calian stands as a market leader in mission-critical solutions with a stronger brand and a diversified presence across geographies, customers, and offerings. I am deeply grateful to our employees whose commitments and creativity have driven our success, to our customers and partners, and want to thank you for your trust and collaboration, to our shareholders, our analysts. Your support has enabled us to pursue bold strategies and deliver sustained growth. Finally, to our board of directors, my thanks for continued support during this transformation.

Speaker #1: This transformation is a testament to the dedication, talent, and resilience of our entire team, not the work of one individual. Colin stands as a market leader in.

Speaker #1: mission critical solutions with a stronger brand and a diversified presence across Today , geographies , customers and offerings . I am deeply grateful to our employees whose commitment and creativity have driven our success to our customers and partners .

Speaker #1: I want to thank you for your trust and collaboration to our shareholders and analysts. Your support has enabled us to pursue bold strategies and deliver sustained growth.

Speaker #1: And finally , to our my thanks for continued Directors , support Board of transformation . I specifically want to previous during this chair , thank our Loeb , and our chair , current George Weber , for tirelessly working with me and the board through all the opportunities and challenges we have faced and forever grateful for your guidance and support building this company into what it is today has been the honor of my career .

Kevin Ford: I specifically want to thank our previous chair, Ken Loeb, and our current chair, George Weber, for tirelessly working with me and the board through all the opportunities and challenges we have faced. I'm forever grateful for your guidance and support. Building this company into what it is today has been the honor of my career. I am confident that the foundation we have laid, our values, our culture of innovation, and our global reach, our footprint in exciting, tailored markets such as defense, and our amazing, dedicated team will continue to propel us forward. I know that the company is in strong hands with Patrick at the helm, and a leadership team ready to write the next chapter of our story. I look forward to watching the company's continued success from a new vantage point and always be cheering you folks on. Wishing you all the best.

I specifically want to thank our previous chair, Ken Loeb, and our current chair, George Weber, for tirelessly working with me and the board through all the opportunities and challenges we have faced. I'm forever grateful for your guidance and support. Building this company into what it is today has been the honor of my career. I am confident that the foundation we have laid, our values, our culture of innovation, and our global reach, our footprint in exciting, tailored markets such as defense, and our amazing, dedicated team will continue to propel us forward. I know that the company is in strong hands with Patrick at the helm, and a leadership team ready to write the next chapter of our story. I look forward to watching the company's continued success from a new vantage point and always be cheering you folks on. Wishing you all the best.

Speaker #1: I am confident that the foundation we have laid our values , our culture of innovation and our global reach , footprint and our exciting tailwind markets such as defense and our amazing , dedicated team will continue to propel forward us .

Speaker #1: I know that the company is in strong hands with leadership ready for the next chapter of our team story. I look forward to watching the company's success from a new and continued vantage point, and I will always be cheering you folks on.

Speaker #1: So wishing you all the best. And with that, I'll pass it back to Jennifer.

Speaker #8: Thank you so much , Kevin . Thank you for everybody for attending our conference call . And and the team look forward to you an update on providing the next quarterly call .

Kevin Ford: With that, I'll pass it back to Jennifer.

Jennifer McCarthy: Thank you so much, Kevin. Thank you, everybody, for attending our conference call. Patrick and the team look forward to providing you an update on the next quarterly call. You may now disconnect.

Jennifer McCaughey: Thank you so much, Kevin. Thank you, everybody, for attending our conference call. Patrick and the team look forward to providing you an update on the next quarterly call. You may now disconnect.

Speaker #8: You may now disconnect .

Operator: This concludes today's conference call. Thank you for your participation, and you may now disconnect.

Q4 2025 Calian Group Ltd Earnings Call

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