TSE:CGY Calian Group Q2 2023 Earnings Report C$47.59 +1.88 (+4.11%) As of 04/25/2025 04:00 PM Eastern Earnings HistoryForecast Calian Group EPS ResultsActual EPSC$0.90Consensus EPS C$1.01Beat/MissMissed by -C$0.11One Year Ago EPSN/ACalian Group Revenue ResultsActual Revenue$168.50 millionExpected Revenue$155.47 millionBeat/MissBeat by +$13.03 millionYoY Revenue GrowthN/ACalian Group Announcement DetailsQuarterQ2 2023Date5/10/2023TimeN/AConference Call DateThursday, May 11, 2023Conference Call Time8:30AM ETConference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress ReleaseEarnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by Calian Group Q2 2023 Earnings Call TranscriptProvided by QuartrMay 11, 2023 ShareLink copied to clipboard.There are 7 speakers on the call. Operator00:00:00Greetings, and welcome to Caelian's Second Quarter 2023 Conference Call. At this time, all participants are in a listen only mode and a question and answer session will follow the formal presentation. Please note, this conference is being recorded. I will now turn the conference over to your host, Jennifer McCarthy, Director of Investor Relations. Ma'am, you may begin. Speaker 100:00:35Thank you, Ali, and good morning, everyone. Thank you for joining us for Calyen's Q2 2023 conference call. Presenting this morning are Kevin Ford, Chief Executive Officer and Patrick Houston, Chief Financial Officer. As noted on Slide 2, 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. Speaker 100:01:06As a reminder, all amounts are expressed in Canadian dollars, except as otherwise specified. With that, let me turn Speaker 200:01:14the call over to Kevin. Thank you, Jennifer, and good morning, everybody. I'm going to get right into our Q2 results. We closed another record quarter, generating revenue growth of 19% we have contributions from both our organic growth initiatives as well as strong performance from recent acquisitions. This impressive performance was a result of double digit growth in 3 of our 4 segments. Speaker 200:01:41Our gross profit reached $52,000,000 up over 30% compared to the same period last year And also represents a record level for a single quarter. Gross margin surpassed the 30% mark for a 4th consecutive quarter our margins increased 3 basis points from the Q2 last year, showing our ability to adapt and deliver consistent performance despite the challenging macro environment, inflationary pressures and supply chain issues. Adjusted EBITDA reached $17,000,000 in line with the same period last year And represents the highest level for a second quarter. EBITDA margin was down compared to last year due to increased personnel costs as well as strategic investments as we continue to scale Calient towards our $1,000,000,000 aspirations. We will continue to monitor the pace of investments to strike the balance between growth And profit margin. Speaker 200:02:34During the quarter, we continued to demonstrate our M and A pedigree and consistent deployment of capital with we entered into a definitive purchase agreement to acquire the assets of U. S.-based Hawaii Pacific Teleport. This acquisition will bring us blue chip roster of long term customers, trusted relationships with satellite operators and managed service providers that we can leverage for cross selling, a strong mix of recurring revenues and accretive margins. We initially expected the transaction to close by the end of our fiscal Q3, it looks like it may take a little longer. We now anticipate it will close before the end of our fiscal year. Speaker 200:03:14I would also like to highlight our continued push to win new customers and extend our relationship with existing clients. This quarter, we recorded $147,000,000 in gross new contract signings, with approximately $78,000,000 from contract renewals and extensions and $69,000,000 for new customers. We exited the quarter with a robust backlog of $1,200,000,000 Of which $262,000,000 is planned to be realized for the balance of this year. With these new contract signings, a healthy backlog and a stronger second half expected, we remain confident in our ability to post our 6th consecutive record year and as such have reiterated our full year guidance. For now, let me provide an update of our results by business segment. Speaker 200:04:01And I'll begin with IT and Cyber. In the Q2, ITCS increased its revenues by over 50 percent to $49,000,000 driven primarily by our expansion at the U. S. Market with the acquisition of Computex in March 2022, coupled with our continued strong performance in our overall cyber practice. In fact, our recurring monthly revenues continue to grow at a steady pace. Speaker 200:04:26This revenue growth was partially offset by lower volume from our on demand talent and government solutions as we are in the process of back doing contracts that have recently come to an end. In March, we mark the 1 year anniversary of the acquisition of Computex. Looking back at the last 12 months, we have generated revenues of approximately $110,000,000 Greatly surpassing our initial expectations of $75,000,000 thus making this acquisition highly accretive. Gross margins increased significantly from 33% in the Q2 last year to close at 40% to acquisitive revenue at higher margins, coupled with higher margin cybersecurity services. Similarly, EBITDA was up over 30% to $7,000,000 or a margin of 15%. Speaker 200:05:11This margin was down compared to the same period last year due to investments in sales and delivery capacity. In the quarter, we signed new contracts valued at $61,000,000 including GPD Companies, Resound Networks and 2 new customers in the healthcare space, Burlington Ontario Health and Connected Care Halton Ontario. For the balance of the year, we are optimistic that we will see improvements in the supply chain and deliver orders currently in backlog. We expect the momentum in ITCS to continue and are confident to post another record year of double digit top line growth. For modeling purposes, note that Q4 revenues will likely be lower we have delivered in Q4 last year as we had significant deliveries in the final weeks of the quarter last year. Speaker 200:05:53Yesterday, we announced that Sasha Guerra, the President of ITCS he has resigned. Sash has accepted CEO position of a local software company here in Ottawa, which is a great career opportunity for him. We're disappointed to see him go as he's made valuable contributions to the business in the short time he was here and Sasha will remain with us until the end of May. We wish him well in his new journey. We will run an official process to find his replacement and in the interim, the strong leadership team within our ITCS segment we'll ensure the continuity of our day to day operations and maintain momentum in both Canada and the U. Speaker 200:06:27S. Turning to our Health segment. In the 2nd quarter, revenue declined 4% to $44,000,000 due mainly to lower one time projects related to COVID-nineteen last year, these projects alone represented a decrease of $8,000,000 or 19% over the same period last year. Excluding this impact, the Health segment would have demonstrated double digit organic growth of 15%. We were able to do this through strong demand from long standing customers, as well as strong momentum for our contract research service in our pharma division. Speaker 200:07:02In fact, our contract research services achieved a stronger quarterly revenue performance for 2nd Gross margins and EBITDA margins decreased slightly to 24% and 16%, respectively. In the quarter, we signed new contract valued at $25,000,000 Amongst these new signings were some key wins, the first being a multiyear the contract with Immigration, Refugees and Citizenship Canada. The second is an exciting development in the pharma space by securing our 1st market access contract, supporting the innovative breast cancer product developed by Syandrea. And finally, our solution offer in person medical service to assist police organizations continue to gain traction for the balance of the year, we expect to return to positive organic growth as the COVID-nineteen impact will taper off, our existing customers are signaled continued demand and our pharmaceutical contract research organization services are gaining increased traction. However, our margins will continue to be temporarily under pressure as we continue to make investments to increase capacity to fully utilize existing customer contracts as well as investments to drive new business. Speaker 200:08:08When we look at our Health business today, with the impact from COVID-nineteen related business behind us, we have a run rate business of approximately $180,000,000 of reoccurring revenues, much higher than our Health segment was before COVID. This baseline of business will serve as a solid base as we look to eclipse the $200,000,000 mark. Turning to our Advanced Technologies segment. In the Q2, we returned to organic growth. Revenue increased 18% to $47,000,000 primarily driven by the deliveries against ground we've recently won, coupled with seasonal AgTech product deliveries and ongoing robust demand for our GNSS antennas. Speaker 200:08:47In fact, GNSS products generate double digit growth again this quarter. This growth comes from new large scale customers as well as increased demand from existing customers As they include our products into more of their offerings. Last quarter, I spoke about supply chain issues, which caused orders to be delayed. While we made some progress in the final month of the quarter, we continue to see delays in certain components and weren't able to address it in our Q2. We are optimistic that we can make further progress in the second half as we chip away at our product backlog. Speaker 200:09:19Gross margins improved from 28% to 29% due to a better mix of higher margin business. The contribution of more Calian products will continue to drive higher gross margins in the longer term. Conversely, EBITDA margins decreased from 14% to 12% as we continue to invest for growth in various initiatives including sales and marketing, R and D and additional capacity. In the quarter, we signed new contracts valued at $48,000,000 Key wins included contracts with data remediation with the Canadian Forces Support Training Group more than $6,000,000 in orders for our GNSS antennas. We also announced the appointment of Daryl Wellington to lead our GNSS business at Talisman. Speaker 200:09:59For the balance of the year, we expect to continue to improve our top line given the anticipated easing supply chain restrictions, delivery of ground system projects recently won And strong demand for our GNSS products. Turning to our Learning segment. In the Q2, revenues increased 16% to $29,000,000 driven by recent investments in technology and geographical diversification, which has increased customer share of wallet and attracting new customers. Gross margins were up to 29% for 27% for the same quarter last year, as we continue to leverage our products through an increasing number of customers and benefit from economies of scale. In contrast, EBITDA margins were down slightly as we invest in growth initiatives, including sales and marketing, international expansion and R and D to support our internally developed software used in the delivery of our virtual training and learning services. Speaker 200:10:51In in the quarter, we signed new contract values of $13,000,000 and we delivered complex training exercise projects around the globe. This includes projects in France, Turkey, Netherlands, Philippines, Jamaica, Indonesia and Jordan. This is a strong indication of our pedigree and our ability to be a global training partner for defense. For the balance of the year, we see continued robust demand for our services and technology in the military training space in Canada and Europe. And as a result, we believe we are on track to break $100,000,000 revenue mark for the first time ever for learning. Speaker 200:11:27This continued growth is giving us more confidence to continue to invest, make sure we are well positioned to capitalize on the macro environment where military training has become mission critical. With that, now turn over to Patrick to discuss cash flow, balance sheet and our guidance. Patrick? Speaker 300:11:42Thank you, Kevin, and good morning. In the second quarter, we generated $1,000,000 of cash flow from operations compared to $19,000,000 in the same period last year. The main variance this quarter was driven from working capital. Recall that last quarter we mentioned that we were ahead of where we thought we would be in terms of recapturing cash from our balance sheet. Working capital was negative $6,000,000 for the quarter, which puts us at positive $6,000,000 for the first half of FY 'twenty three. Speaker 300:12:08This exhibits strong performance in an environment where we are driving 16% revenue growth on a year to date basis. We expect further recapture in the second half despite the continued revenue growth. Operating free cash flow was $11,000,000 this quarter and represents a 64% conversion rate from adjusted EBITDA. A slightly lower conversion rate was due to taxes paid as we filed and closed off the fiscal 2022 year. We continue to have a disciplined approach to capital deployment with the view of getting maximum return for the amounts invested. Speaker 300:12:40In the Q2, we used our cash to pay debt, dividends and earn outs on past acquisitions as well as invest in CapEx. We expect further outflow on M and A agenda in the second half. The first of these being the closing of the acquisitions of Hawaii Pacific Teleport, the second being the scheduled earn out payments related to the acquisitions of Davis Off High Security as well as AlioHealth. These amounts are recorded in full on our balance sheet at the end of the quarter. We we continue to have a robust pipeline of acquisitions and are looking to continue our track record of multiple deals per year. Speaker 300:13:15We maintain our dividend rate at $0.28 per share. We continue to see the dividend as an important part of our balance capital deployment strategy we will reevaluate the size of the dividend in future quarters. We invested $2,000,000 in CapEx in the quarter and continue to manage our we have been within our target of $7,000,000 to $8,000,000 this year. As at March 31, our $80,000,000 credit facility was unused and we had $46,000,000 of cash on hand. As a result, we ended the 2nd quarter in a net cash position once again. Speaker 300:13:45This cash combined with our unused committed credit facility provides us with $126,000,000 of committed net liquidity, and we're able to further expand this with our current lending syndicate, if need be. We've already begun the process of renewing our credit facility to ensure we have the access to sufficient capital to meet our growth aspirations in the years to come. Given our strong cash flow generating ability and liquidity position, we're operating from a position of strength as we continue to execute both our organic growth plans and our M and A strategy. Let's take a look at our guidance for FY2023. Coming off a solid quarter, we are reiterating our guidance. Speaker 300:14:24Note that this guidance has not been updated to include the impact of the acquisition of Hawaii Pacific Teleport. We originally we expect the acquisition to close at some point in Q3. However, it looks like it might take a little longer than anticipated due to procedural matters. We do believe it will close before the end of the fiscal year. As a reminder, we expect revenues in the range of $630,000,000 to $680,000,000 At the midpoint, this reflects revenue growth of approximately 13%. Speaker 300:14:53At the end of Q2, our trailing 12 month revenue sits at 627,000,000 our guidance assumes a return to positive organic growth with a closer to even split between organic and acquisitive growth. Our strong revenue performance in the quarter means we expect to be at or slightly above the midpoint of the guidance range. We expect EBITDA in the range of $70,000,000 to $75,000,000 At the midpoint, it reflects EBITDA growth of approximately 10%. After Q2, our trailing 12 months EBITDA sits at 66,000,000 as Kevin mentioned at the beginning of the call, we're constantly monitoring and adjusting our pace of investment vis a vis our EBITDA and free cash flow growth. Finding the right balance will be key to position ourselves for another record year of profitable growth in FY 'twenty four. Speaker 300:15:40Currently we expect our full year EBITDA to come in at the low end of the guidance range. And finally, we expect adjusted net income in the range of $46,000,000 to 50,000,000 I must caution that revenues and profitability realized are ultimately dependent on the extent and timing of future contract awards, customer realization of existing contract vehicles and potential recessionary pressures. Our guidance does not incorporate any additional M and A and should we close any new opportunities, their contributions would be incremental. Please see our press release and MD and A for a detailed reconciliation of our guidance. I'll now turn the call back over to Kevin to conclude our prepared remarks. Speaker 200:16:18Thank you, Patrick. So in conclusion, our Q2 results showcase some key milestones. Our highest ever revenues, gross margin above 30% for the 4th consecutive quarter and continued EBITDA and cash flow performance. Combined with our Q1 performance, this is our strongest first half performance in company history and we expect the second half to be stronger than the first. Achieving our guidance will translate into our 6th consecutive year of record results in terms of revenues, gross profit and EBITDA. Speaker 200:16:55This demonstrates that our business model, including our diversity, is working. We are a growth company with a clean balance sheet incredible opportunity is available to note both domestically and globally across our 4 pistons. We've been making investments in our growth recently, which has temporarily impacted our EBITDA margins. These investments are by design and are positioned to continue we are also laser focused on continuing our M and A pace. We have a solid pipeline and are working hard to close more deals we have similar success to the recent transactions. Speaker 200:17:33In fact, today, we are preparing and presenting our next 3 year strategic plan to the Board, as we will have successfully completed our Imagine 2023 plan by the end of this fiscal year. This new plan includes amongst many objectives our path to 1,000,000,000 And we're really excited with what we are seeing and look forward to presenting it to the market at our next Investor Day. Finally, I want to thank our staff for their commitment and dedication. I also want to thank our customers for their loyalty, our suppliers for the collaboration and our shareholders for their continued support. And with that, Ali, I'd like to now open the call for questions. Operator00:18:11Thank you. At this time, we will be conducting a question and answer session. Thank you. Our first question is coming from Maxim Modeshansky with RBC Capital Markets. You may proceed. Speaker 400:18:52Yeah, Thanks and good morning. I want to start on ITCS. Can you expand on the dynamics within that segment that were causing Negative organic revenue growth with On Demand Talent and Government Solutions, just in terms of kind of what's going on there? And How much of the decline in IPCS is from the longer lead times you were mentioning? Speaker 300:19:15Good morning, Max. Yes, on the on demand, I think it was the reality of some of the contracts we won we're coming to an end. So we saw those some of those come to an end this quarter. We're actively bidding on lots of new offers. Obviously, the strike in the government has delayed some of the new opportunities finalized, but we're expecting that to pick back up here in the second half. Speaker 300:19:36And to the extent we can win at a similar rate as we have in the past, I think you'll see that business line kind of recovered back to where it was in the past. So we're seeing this kind of as a temporary issue. On the supply chain, yes, I think we've been making progress on the backlog. We're still the lead times certainly are nowhere near they were Pre COVID, but we're dealing as best as we can and we're hoping to make some progress on that in the second half in IQCS. Speaker 400:20:06Got it. And just switching to Advanced Technologies, should Should we take the strong revenues, but kind of keeping the 2023 guidance The same. Should we take that to mean that these were kind of already anticipating when you were setting the guidance? Or was there any surprises in terms of Either the magnitude or the timing of the projects? Speaker 300:20:33I don't think there was a surprise. I think we've seen the mix will be slightly different in the second half. I think a lot of the products that we've been frustrated a bit here with the supply chain, we're starting to finally see some progress. As Kevin mentioned, in the last Month of the quarter, we started to make some shipments, which was great to see. And certainly, the team now is feeling more confident that they can get some of that out in the second half. Speaker 300:20:54So I you might see a bit less revenue, but better margin profile in the second half there as we get some of those products shipped to customers. Speaker 400:21:03And just final one for me, just is it possible to kind of give more color on those new projects that are ramping this quarter just in terms of The contract timing and maybe the cadence of revenues and how you expect that to play out through the quarters or years? Speaker 200:21:20Yes. Hi, Max, Kevin. So from and I think your question is specifically from an advanced deck perspective. So Really, it's a mix of things. So as I mentioned, we're seeing in our terrestrial area of advanced tech, it's going very well. Speaker 200:21:34So our GNSS antennas, our AgTech products, our nuclear business, very strong performance across each of those. So that's definitely going to be a which we're delivering, again, we're going through those now. So again, that's going to be a strong contributor to the back half of the year. And the key thing, I think, as Patrick mentioned, is unlocking some of We have a backlog of product shipments and we're pretty confident right now we're seeing much more positive signs that we can Unlock that backlog and actually move this out in the second half. So it's a combination of a few things and I would say those are the 3 primary drivers. Speaker 400:22:16Great. Thanks. I'll pass the line. Speaker 200:22:18Thanks, Max. Operator00:22:21Thank you. Our next question is coming from Rini Sharma with BMO Capital Markets. You may proceed. Speaker 500:22:30Good morning, Kevin and Patrick, and congrats on a good quarter. So my question is twofold. In terms of capacity for further M and A as you wait for the Hawaiian Pacific Teleport to close, what is that looking like for the rest of the year? And then where are you seeing the most opportunity in terms of segments and what's driving that? Speaker 300:22:57Hi, good morning, Rene. Yes, I think we still have a lot of capacity. Obviously, I think Hawaii Pacific Teleport, we're anxiously we're waiting to close that deal, but we've already started working on several other files. We are optimistic that there's potential that we could do one more deal before the end of the year, but It depends on timing. And the pipeline is strong as we mentioned during the call. Speaker 300:23:18Certainly lots of targets in the IT segment That we're optimistic about, so we're pushing that forward. And we're with Derek coming on board in health, we've been resetting our strategy in our sites and focusing on next year to find a target and healthy. We haven't done a transaction there in a few years. So we're optimistic about doing something in FY 'twenty four in Dallas. Yes. Speaker 300:23:39So I think overall, I think the pipeline is as strong as it's been for a long time and now it's really just focusing on finding those deals that meet our criteria and keeping the momentum going into next year of doing 1 to 2 deals again, but obviously larger size that's been our what we've been telling investors that we want to continue to increase the size of the transactions we're doing with more impact. Speaker 500:24:04And are there any like trends that are driving The underlying trends in IT or health that's kind of driving your decision to pursue those kind of deals like macroeconomic trends or industry trends? I Speaker 300:24:20mean in IT certainly we're seeing a lot of our customer sets putting more and more Of their investments toward IT Resources. So I think that's giving us confidence that if we do an M and A deal there and we push for the synergies that we can realize them. And in health, I think this is just kind of the next step in our path. We've been very Canadian focused, but we've seen success in other segments as we've kind of outside Canada and I think this is just their next natural step for our Health segment. Speaker 500:24:48Okay, got it. And just On the inflationary pressures that you mentioned this quarter, what's driving that? And like what should we Speaker 300:25:03we certainly had to make adjustments on kind of our fixed cost base with regards to resources last year, obviously, I think a lot of companies were doing that as we were dealing with kind of the inflationary pressures last year. So I think that's been adjusted and it's kind of in our base now. So now we're readjusting things both from a sales and margin perspective. So I think there's some timing there, but I think The guidance reflects kind of better margins in the second half as the product mix changes. So I think we'll be building ourselves back up to kind of the EBITDA percentage levels we were last year. Speaker 500:25:38Okay. Okay, that's helpful. Thank you so much. Speaker 200:25:41Thank you. Operator00:25:44Thank you. Our next question is coming from Michael Kipprios with Desjardins Capital Markets. You may proceed. Speaker 600:25:59Good morning, everyone, and congrats on the quarter. Maybe circling back to the Hawaii Pacific Teleport acquisition, can you give a bit more color on maybe Some of the competition on the island, the current blue chip customers that you mentioned and some possible cross selling synergies that The SaaS could bring once it closes. Speaker 300:26:21Yes, good morning, Mike. Yes, it is a bit of a unique thing. There's not a lot of competitors in the Pacific for this type of service, which was one of the reasons we're excited about this asset, obviously the team there has built something unique and the customers realize that. I think from across all, it's very exciting. We've been at some of the shows already on the satellite side, Pat Thier and his team. Speaker 300:26:40And we're also seeing already new conversations with customers that we weren't having before in terms of Offering a more well rounded solution. So it's still very early, but so far it's been promising. So we're optimistic that This will expand kind of our footing in space and get us opportunities maybe we wouldn't have been able to get to beforehand. Speaker 600:27:02Thank you. That's helpful. And maybe just on the new contract signings. To start the year, you had 2 lower quarters Compared to last year and especially in the Learning segment, is there anything that specifically that explains this or is it just the seasonality and maybe the year over year trend? Speaker 200:27:20Yes, it's Kevin. So really no core cause here. Some of this is just frankly timing and pace with regard to look at military spending and military contracts, at times they can take longer. It's no real cyclical element to that. So you know, any order can be up, it can be down. Speaker 200:27:36So I think right now, I wouldn't read more into that other than we're just dealing with timing and certain elements. The pipeline remains strong from a sales perspective across all of our segments. And I expect that as we continue throughout the year, we'll have still strong sales supporting our record results for this year. Speaker 600:27:54Thank you. That's helpful. Maybe just a last one on the resignation of Sasha in the IT segment. Is there a certain timeline and the type of process that you want to run versus internally, externally, maybe just a bit more color on that. That's it for me. Speaker 200:28:08Yes. Thanks. I want to reiterate, we're obviously I want to reiterate and thank Sasha for his time here and a lot of great things in our segment. We've built a great team underneath Sasha And he's built a great team underneath him. So I'm very confident in our ability to maintain the trajectory, and he's got a great opportunity with the CEO level role in another So again, I wish them all the best. Speaker 200:28:31From a process perspective, the way we run this for anyone who reports directly to me, we will run a process for both internal and external candidates we'll be kicking that off as soon as we get out of this quarter. We'll be kicking that off very shortly and we'll stand by as soon as we have an update. We'll let our shareholders know our new direction going forward. Appreciate it. Congrats again. Speaker 200:28:57Thank you. Appreciate the call. Operator00:29:01Thank you. We have reached the end of our question and answer session. So I'll now turn the call back over to Mr. Ford for any closing comments. Speaker 200:29:12Thank you, Ali, and for facilitating today's call. And on that note, I want to thank each and every one of you for attending and looking forward to providing you an update Operator00:29:29this concludes today's conference. You may disconnect your lines at this time and we thank you for your participation.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallCalian Group Q2 202300:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsSlide DeckPress Release Calian Group Earnings HeadlinesThe past three years for Calian Group (TSE:CGY) investors has not been profitableMarch 16, 2025 | finance.yahoo.comCalian Group's (TSE:CGY) Conservative Accounting Might Explain Soft EarningsFebruary 20, 2025 | finance.yahoo.comTrump’s betrayal exposed Trump’s Final Reset Inside the shocking plot to re-engineer America’s financial system…and why you need to move your money now.April 26, 2025 | Porter & Company (Ad)Public market insider buying at Calian Group (CGY)February 19, 2025 | theglobeandmail.comCalian Group targets $800M-$880M revenue in FY2025 with defense growth focusFebruary 13, 2025 | seekingalpha.comSerious Value: 3 TSX Stocks to Buy in the New YearFebruary 5, 2025 | ca.finance.yahoo.comSee More Calian Group Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Calian Group? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Calian Group and other key companies, straight to your email. Email Address About Calian GroupCalian Group (TSE:CGY) 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.View Calian Group ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Market Anticipation Builds: Joby Stock Climbs Ahead of EarningsIs Intuitive Surgical a Buy After Volatile Reaction to Earnings?Seismic Shift at Intel: Massive Layoffs Precede Crucial EarningsRocket Lab Lands New Contract, Builds Momentum Ahead of EarningsAmazon's Earnings Could Fuel a Rapid Breakout Tesla Earnings Miss, But Musk Refocuses and Bulls ReactQualcomm’s Range Narrows Ahead of Earnings as Bulls Step In Upcoming Earnings Cadence Design Systems (4/28/2025)Welltower (4/28/2025)Waste Management (4/28/2025)AstraZeneca (4/29/2025)Booking (4/29/2025)DoorDash (4/29/2025)Honeywell International (4/29/2025)Mondelez International (4/29/2025)PayPal (4/29/2025)Regeneron Pharmaceuticals (4/29/2025) Get 30 Days of MarketBeat All Access for Free Sign up for MarketBeat All Access to gain access to MarketBeat's full suite of research tools. Start Your 30-Day Trial MarketBeat All Access Features Best-in-Class Portfolio Monitoring Get personalized stock ideas. Compare portfolio to indices. Check stock news, ratings, SEC filings, and more. Stock Ideas and Recommendations See daily stock ideas from top analysts. Receive short-term trading ideas from MarketBeat. Identify trending stocks on social media. Advanced Stock Screeners and Research Tools Use our seven stock screeners to find suitable stocks. Stay informed with MarketBeat's real-time news. Export data to Excel for personal analysis. Sign in to your free account to enjoy these benefits In-depth profiles and analysis for 20,000 public companies. Real-time analyst ratings, insider transactions, earnings data, and more. Our daily ratings and market update email newsletter. Sign in to your free account to enjoy all that MarketBeat has to offer. Sign In Create Account Your Email Address: Email Address Required Your Password: Password Required Log In or Sign in with Facebook Sign in with Google Forgot your password? Your Email Address: Please enter your email address. Please enter a valid email address Choose a Password: Please enter your password. Your password must be at least 8 characters long and contain at least 1 number, 1 letter, and 1 special character. Create My Account (Free) or Sign in with Facebook Sign in with Google By creating a free account, you agree to our terms of service. This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
There are 7 speakers on the call. Operator00:00:00Greetings, and welcome to Caelian's Second Quarter 2023 Conference Call. At this time, all participants are in a listen only mode and a question and answer session will follow the formal presentation. Please note, this conference is being recorded. I will now turn the conference over to your host, Jennifer McCarthy, Director of Investor Relations. Ma'am, you may begin. Speaker 100:00:35Thank you, Ali, and good morning, everyone. Thank you for joining us for Calyen's Q2 2023 conference call. Presenting this morning are Kevin Ford, Chief Executive Officer and Patrick Houston, Chief Financial Officer. As noted on Slide 2, 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. Speaker 100:01:06As a reminder, all amounts are expressed in Canadian dollars, except as otherwise specified. With that, let me turn Speaker 200:01:14the call over to Kevin. Thank you, Jennifer, and good morning, everybody. I'm going to get right into our Q2 results. We closed another record quarter, generating revenue growth of 19% we have contributions from both our organic growth initiatives as well as strong performance from recent acquisitions. This impressive performance was a result of double digit growth in 3 of our 4 segments. Speaker 200:01:41Our gross profit reached $52,000,000 up over 30% compared to the same period last year And also represents a record level for a single quarter. Gross margin surpassed the 30% mark for a 4th consecutive quarter our margins increased 3 basis points from the Q2 last year, showing our ability to adapt and deliver consistent performance despite the challenging macro environment, inflationary pressures and supply chain issues. Adjusted EBITDA reached $17,000,000 in line with the same period last year And represents the highest level for a second quarter. EBITDA margin was down compared to last year due to increased personnel costs as well as strategic investments as we continue to scale Calient towards our $1,000,000,000 aspirations. We will continue to monitor the pace of investments to strike the balance between growth And profit margin. Speaker 200:02:34During the quarter, we continued to demonstrate our M and A pedigree and consistent deployment of capital with we entered into a definitive purchase agreement to acquire the assets of U. S.-based Hawaii Pacific Teleport. This acquisition will bring us blue chip roster of long term customers, trusted relationships with satellite operators and managed service providers that we can leverage for cross selling, a strong mix of recurring revenues and accretive margins. We initially expected the transaction to close by the end of our fiscal Q3, it looks like it may take a little longer. We now anticipate it will close before the end of our fiscal year. Speaker 200:03:14I would also like to highlight our continued push to win new customers and extend our relationship with existing clients. This quarter, we recorded $147,000,000 in gross new contract signings, with approximately $78,000,000 from contract renewals and extensions and $69,000,000 for new customers. We exited the quarter with a robust backlog of $1,200,000,000 Of which $262,000,000 is planned to be realized for the balance of this year. With these new contract signings, a healthy backlog and a stronger second half expected, we remain confident in our ability to post our 6th consecutive record year and as such have reiterated our full year guidance. For now, let me provide an update of our results by business segment. Speaker 200:04:01And I'll begin with IT and Cyber. In the Q2, ITCS increased its revenues by over 50 percent to $49,000,000 driven primarily by our expansion at the U. S. Market with the acquisition of Computex in March 2022, coupled with our continued strong performance in our overall cyber practice. In fact, our recurring monthly revenues continue to grow at a steady pace. Speaker 200:04:26This revenue growth was partially offset by lower volume from our on demand talent and government solutions as we are in the process of back doing contracts that have recently come to an end. In March, we mark the 1 year anniversary of the acquisition of Computex. Looking back at the last 12 months, we have generated revenues of approximately $110,000,000 Greatly surpassing our initial expectations of $75,000,000 thus making this acquisition highly accretive. Gross margins increased significantly from 33% in the Q2 last year to close at 40% to acquisitive revenue at higher margins, coupled with higher margin cybersecurity services. Similarly, EBITDA was up over 30% to $7,000,000 or a margin of 15%. Speaker 200:05:11This margin was down compared to the same period last year due to investments in sales and delivery capacity. In the quarter, we signed new contracts valued at $61,000,000 including GPD Companies, Resound Networks and 2 new customers in the healthcare space, Burlington Ontario Health and Connected Care Halton Ontario. For the balance of the year, we are optimistic that we will see improvements in the supply chain and deliver orders currently in backlog. We expect the momentum in ITCS to continue and are confident to post another record year of double digit top line growth. For modeling purposes, note that Q4 revenues will likely be lower we have delivered in Q4 last year as we had significant deliveries in the final weeks of the quarter last year. Speaker 200:05:53Yesterday, we announced that Sasha Guerra, the President of ITCS he has resigned. Sash has accepted CEO position of a local software company here in Ottawa, which is a great career opportunity for him. We're disappointed to see him go as he's made valuable contributions to the business in the short time he was here and Sasha will remain with us until the end of May. We wish him well in his new journey. We will run an official process to find his replacement and in the interim, the strong leadership team within our ITCS segment we'll ensure the continuity of our day to day operations and maintain momentum in both Canada and the U. Speaker 200:06:27S. Turning to our Health segment. In the 2nd quarter, revenue declined 4% to $44,000,000 due mainly to lower one time projects related to COVID-nineteen last year, these projects alone represented a decrease of $8,000,000 or 19% over the same period last year. Excluding this impact, the Health segment would have demonstrated double digit organic growth of 15%. We were able to do this through strong demand from long standing customers, as well as strong momentum for our contract research service in our pharma division. Speaker 200:07:02In fact, our contract research services achieved a stronger quarterly revenue performance for 2nd Gross margins and EBITDA margins decreased slightly to 24% and 16%, respectively. In the quarter, we signed new contract valued at $25,000,000 Amongst these new signings were some key wins, the first being a multiyear the contract with Immigration, Refugees and Citizenship Canada. The second is an exciting development in the pharma space by securing our 1st market access contract, supporting the innovative breast cancer product developed by Syandrea. And finally, our solution offer in person medical service to assist police organizations continue to gain traction for the balance of the year, we expect to return to positive organic growth as the COVID-nineteen impact will taper off, our existing customers are signaled continued demand and our pharmaceutical contract research organization services are gaining increased traction. However, our margins will continue to be temporarily under pressure as we continue to make investments to increase capacity to fully utilize existing customer contracts as well as investments to drive new business. Speaker 200:08:08When we look at our Health business today, with the impact from COVID-nineteen related business behind us, we have a run rate business of approximately $180,000,000 of reoccurring revenues, much higher than our Health segment was before COVID. This baseline of business will serve as a solid base as we look to eclipse the $200,000,000 mark. Turning to our Advanced Technologies segment. In the Q2, we returned to organic growth. Revenue increased 18% to $47,000,000 primarily driven by the deliveries against ground we've recently won, coupled with seasonal AgTech product deliveries and ongoing robust demand for our GNSS antennas. Speaker 200:08:47In fact, GNSS products generate double digit growth again this quarter. This growth comes from new large scale customers as well as increased demand from existing customers As they include our products into more of their offerings. Last quarter, I spoke about supply chain issues, which caused orders to be delayed. While we made some progress in the final month of the quarter, we continue to see delays in certain components and weren't able to address it in our Q2. We are optimistic that we can make further progress in the second half as we chip away at our product backlog. Speaker 200:09:19Gross margins improved from 28% to 29% due to a better mix of higher margin business. The contribution of more Calian products will continue to drive higher gross margins in the longer term. Conversely, EBITDA margins decreased from 14% to 12% as we continue to invest for growth in various initiatives including sales and marketing, R and D and additional capacity. In the quarter, we signed new contracts valued at $48,000,000 Key wins included contracts with data remediation with the Canadian Forces Support Training Group more than $6,000,000 in orders for our GNSS antennas. We also announced the appointment of Daryl Wellington to lead our GNSS business at Talisman. Speaker 200:09:59For the balance of the year, we expect to continue to improve our top line given the anticipated easing supply chain restrictions, delivery of ground system projects recently won And strong demand for our GNSS products. Turning to our Learning segment. In the Q2, revenues increased 16% to $29,000,000 driven by recent investments in technology and geographical diversification, which has increased customer share of wallet and attracting new customers. Gross margins were up to 29% for 27% for the same quarter last year, as we continue to leverage our products through an increasing number of customers and benefit from economies of scale. In contrast, EBITDA margins were down slightly as we invest in growth initiatives, including sales and marketing, international expansion and R and D to support our internally developed software used in the delivery of our virtual training and learning services. Speaker 200:10:51In in the quarter, we signed new contract values of $13,000,000 and we delivered complex training exercise projects around the globe. This includes projects in France, Turkey, Netherlands, Philippines, Jamaica, Indonesia and Jordan. This is a strong indication of our pedigree and our ability to be a global training partner for defense. For the balance of the year, we see continued robust demand for our services and technology in the military training space in Canada and Europe. And as a result, we believe we are on track to break $100,000,000 revenue mark for the first time ever for learning. Speaker 200:11:27This continued growth is giving us more confidence to continue to invest, make sure we are well positioned to capitalize on the macro environment where military training has become mission critical. With that, now turn over to Patrick to discuss cash flow, balance sheet and our guidance. Patrick? Speaker 300:11:42Thank you, Kevin, and good morning. In the second quarter, we generated $1,000,000 of cash flow from operations compared to $19,000,000 in the same period last year. The main variance this quarter was driven from working capital. Recall that last quarter we mentioned that we were ahead of where we thought we would be in terms of recapturing cash from our balance sheet. Working capital was negative $6,000,000 for the quarter, which puts us at positive $6,000,000 for the first half of FY 'twenty three. Speaker 300:12:08This exhibits strong performance in an environment where we are driving 16% revenue growth on a year to date basis. We expect further recapture in the second half despite the continued revenue growth. Operating free cash flow was $11,000,000 this quarter and represents a 64% conversion rate from adjusted EBITDA. A slightly lower conversion rate was due to taxes paid as we filed and closed off the fiscal 2022 year. We continue to have a disciplined approach to capital deployment with the view of getting maximum return for the amounts invested. Speaker 300:12:40In the Q2, we used our cash to pay debt, dividends and earn outs on past acquisitions as well as invest in CapEx. We expect further outflow on M and A agenda in the second half. The first of these being the closing of the acquisitions of Hawaii Pacific Teleport, the second being the scheduled earn out payments related to the acquisitions of Davis Off High Security as well as AlioHealth. These amounts are recorded in full on our balance sheet at the end of the quarter. We we continue to have a robust pipeline of acquisitions and are looking to continue our track record of multiple deals per year. Speaker 300:13:15We maintain our dividend rate at $0.28 per share. We continue to see the dividend as an important part of our balance capital deployment strategy we will reevaluate the size of the dividend in future quarters. We invested $2,000,000 in CapEx in the quarter and continue to manage our we have been within our target of $7,000,000 to $8,000,000 this year. As at March 31, our $80,000,000 credit facility was unused and we had $46,000,000 of cash on hand. As a result, we ended the 2nd quarter in a net cash position once again. Speaker 300:13:45This cash combined with our unused committed credit facility provides us with $126,000,000 of committed net liquidity, and we're able to further expand this with our current lending syndicate, if need be. We've already begun the process of renewing our credit facility to ensure we have the access to sufficient capital to meet our growth aspirations in the years to come. Given our strong cash flow generating ability and liquidity position, we're operating from a position of strength as we continue to execute both our organic growth plans and our M and A strategy. Let's take a look at our guidance for FY2023. Coming off a solid quarter, we are reiterating our guidance. Speaker 300:14:24Note that this guidance has not been updated to include the impact of the acquisition of Hawaii Pacific Teleport. We originally we expect the acquisition to close at some point in Q3. However, it looks like it might take a little longer than anticipated due to procedural matters. We do believe it will close before the end of the fiscal year. As a reminder, we expect revenues in the range of $630,000,000 to $680,000,000 At the midpoint, this reflects revenue growth of approximately 13%. Speaker 300:14:53At the end of Q2, our trailing 12 month revenue sits at 627,000,000 our guidance assumes a return to positive organic growth with a closer to even split between organic and acquisitive growth. Our strong revenue performance in the quarter means we expect to be at or slightly above the midpoint of the guidance range. We expect EBITDA in the range of $70,000,000 to $75,000,000 At the midpoint, it reflects EBITDA growth of approximately 10%. After Q2, our trailing 12 months EBITDA sits at 66,000,000 as Kevin mentioned at the beginning of the call, we're constantly monitoring and adjusting our pace of investment vis a vis our EBITDA and free cash flow growth. Finding the right balance will be key to position ourselves for another record year of profitable growth in FY 'twenty four. Speaker 300:15:40Currently we expect our full year EBITDA to come in at the low end of the guidance range. And finally, we expect adjusted net income in the range of $46,000,000 to 50,000,000 I must caution that revenues and profitability realized are ultimately dependent on the extent and timing of future contract awards, customer realization of existing contract vehicles and potential recessionary pressures. Our guidance does not incorporate any additional M and A and should we close any new opportunities, their contributions would be incremental. Please see our press release and MD and A for a detailed reconciliation of our guidance. I'll now turn the call back over to Kevin to conclude our prepared remarks. Speaker 200:16:18Thank you, Patrick. So in conclusion, our Q2 results showcase some key milestones. Our highest ever revenues, gross margin above 30% for the 4th consecutive quarter and continued EBITDA and cash flow performance. Combined with our Q1 performance, this is our strongest first half performance in company history and we expect the second half to be stronger than the first. Achieving our guidance will translate into our 6th consecutive year of record results in terms of revenues, gross profit and EBITDA. Speaker 200:16:55This demonstrates that our business model, including our diversity, is working. We are a growth company with a clean balance sheet incredible opportunity is available to note both domestically and globally across our 4 pistons. We've been making investments in our growth recently, which has temporarily impacted our EBITDA margins. These investments are by design and are positioned to continue we are also laser focused on continuing our M and A pace. We have a solid pipeline and are working hard to close more deals we have similar success to the recent transactions. Speaker 200:17:33In fact, today, we are preparing and presenting our next 3 year strategic plan to the Board, as we will have successfully completed our Imagine 2023 plan by the end of this fiscal year. This new plan includes amongst many objectives our path to 1,000,000,000 And we're really excited with what we are seeing and look forward to presenting it to the market at our next Investor Day. Finally, I want to thank our staff for their commitment and dedication. I also want to thank our customers for their loyalty, our suppliers for the collaboration and our shareholders for their continued support. And with that, Ali, I'd like to now open the call for questions. Operator00:18:11Thank you. At this time, we will be conducting a question and answer session. Thank you. Our first question is coming from Maxim Modeshansky with RBC Capital Markets. You may proceed. Speaker 400:18:52Yeah, Thanks and good morning. I want to start on ITCS. Can you expand on the dynamics within that segment that were causing Negative organic revenue growth with On Demand Talent and Government Solutions, just in terms of kind of what's going on there? And How much of the decline in IPCS is from the longer lead times you were mentioning? Speaker 300:19:15Good morning, Max. Yes, on the on demand, I think it was the reality of some of the contracts we won we're coming to an end. So we saw those some of those come to an end this quarter. We're actively bidding on lots of new offers. Obviously, the strike in the government has delayed some of the new opportunities finalized, but we're expecting that to pick back up here in the second half. Speaker 300:19:36And to the extent we can win at a similar rate as we have in the past, I think you'll see that business line kind of recovered back to where it was in the past. So we're seeing this kind of as a temporary issue. On the supply chain, yes, I think we've been making progress on the backlog. We're still the lead times certainly are nowhere near they were Pre COVID, but we're dealing as best as we can and we're hoping to make some progress on that in the second half in IQCS. Speaker 400:20:06Got it. And just switching to Advanced Technologies, should Should we take the strong revenues, but kind of keeping the 2023 guidance The same. Should we take that to mean that these were kind of already anticipating when you were setting the guidance? Or was there any surprises in terms of Either the magnitude or the timing of the projects? Speaker 300:20:33I don't think there was a surprise. I think we've seen the mix will be slightly different in the second half. I think a lot of the products that we've been frustrated a bit here with the supply chain, we're starting to finally see some progress. As Kevin mentioned, in the last Month of the quarter, we started to make some shipments, which was great to see. And certainly, the team now is feeling more confident that they can get some of that out in the second half. Speaker 300:20:54So I you might see a bit less revenue, but better margin profile in the second half there as we get some of those products shipped to customers. Speaker 400:21:03And just final one for me, just is it possible to kind of give more color on those new projects that are ramping this quarter just in terms of The contract timing and maybe the cadence of revenues and how you expect that to play out through the quarters or years? Speaker 200:21:20Yes. Hi, Max, Kevin. So from and I think your question is specifically from an advanced deck perspective. So Really, it's a mix of things. So as I mentioned, we're seeing in our terrestrial area of advanced tech, it's going very well. Speaker 200:21:34So our GNSS antennas, our AgTech products, our nuclear business, very strong performance across each of those. So that's definitely going to be a which we're delivering, again, we're going through those now. So again, that's going to be a strong contributor to the back half of the year. And the key thing, I think, as Patrick mentioned, is unlocking some of We have a backlog of product shipments and we're pretty confident right now we're seeing much more positive signs that we can Unlock that backlog and actually move this out in the second half. So it's a combination of a few things and I would say those are the 3 primary drivers. Speaker 400:22:16Great. Thanks. I'll pass the line. Speaker 200:22:18Thanks, Max. Operator00:22:21Thank you. Our next question is coming from Rini Sharma with BMO Capital Markets. You may proceed. Speaker 500:22:30Good morning, Kevin and Patrick, and congrats on a good quarter. So my question is twofold. In terms of capacity for further M and A as you wait for the Hawaiian Pacific Teleport to close, what is that looking like for the rest of the year? And then where are you seeing the most opportunity in terms of segments and what's driving that? Speaker 300:22:57Hi, good morning, Rene. Yes, I think we still have a lot of capacity. Obviously, I think Hawaii Pacific Teleport, we're anxiously we're waiting to close that deal, but we've already started working on several other files. We are optimistic that there's potential that we could do one more deal before the end of the year, but It depends on timing. And the pipeline is strong as we mentioned during the call. Speaker 300:23:18Certainly lots of targets in the IT segment That we're optimistic about, so we're pushing that forward. And we're with Derek coming on board in health, we've been resetting our strategy in our sites and focusing on next year to find a target and healthy. We haven't done a transaction there in a few years. So we're optimistic about doing something in FY 'twenty four in Dallas. Yes. Speaker 300:23:39So I think overall, I think the pipeline is as strong as it's been for a long time and now it's really just focusing on finding those deals that meet our criteria and keeping the momentum going into next year of doing 1 to 2 deals again, but obviously larger size that's been our what we've been telling investors that we want to continue to increase the size of the transactions we're doing with more impact. Speaker 500:24:04And are there any like trends that are driving The underlying trends in IT or health that's kind of driving your decision to pursue those kind of deals like macroeconomic trends or industry trends? I Speaker 300:24:20mean in IT certainly we're seeing a lot of our customer sets putting more and more Of their investments toward IT Resources. So I think that's giving us confidence that if we do an M and A deal there and we push for the synergies that we can realize them. And in health, I think this is just kind of the next step in our path. We've been very Canadian focused, but we've seen success in other segments as we've kind of outside Canada and I think this is just their next natural step for our Health segment. Speaker 500:24:48Okay, got it. And just On the inflationary pressures that you mentioned this quarter, what's driving that? And like what should we Speaker 300:25:03we certainly had to make adjustments on kind of our fixed cost base with regards to resources last year, obviously, I think a lot of companies were doing that as we were dealing with kind of the inflationary pressures last year. So I think that's been adjusted and it's kind of in our base now. So now we're readjusting things both from a sales and margin perspective. So I think there's some timing there, but I think The guidance reflects kind of better margins in the second half as the product mix changes. So I think we'll be building ourselves back up to kind of the EBITDA percentage levels we were last year. Speaker 500:25:38Okay. Okay, that's helpful. Thank you so much. Speaker 200:25:41Thank you. Operator00:25:44Thank you. Our next question is coming from Michael Kipprios with Desjardins Capital Markets. You may proceed. Speaker 600:25:59Good morning, everyone, and congrats on the quarter. Maybe circling back to the Hawaii Pacific Teleport acquisition, can you give a bit more color on maybe Some of the competition on the island, the current blue chip customers that you mentioned and some possible cross selling synergies that The SaaS could bring once it closes. Speaker 300:26:21Yes, good morning, Mike. Yes, it is a bit of a unique thing. There's not a lot of competitors in the Pacific for this type of service, which was one of the reasons we're excited about this asset, obviously the team there has built something unique and the customers realize that. I think from across all, it's very exciting. We've been at some of the shows already on the satellite side, Pat Thier and his team. Speaker 300:26:40And we're also seeing already new conversations with customers that we weren't having before in terms of Offering a more well rounded solution. So it's still very early, but so far it's been promising. So we're optimistic that This will expand kind of our footing in space and get us opportunities maybe we wouldn't have been able to get to beforehand. Speaker 600:27:02Thank you. That's helpful. And maybe just on the new contract signings. To start the year, you had 2 lower quarters Compared to last year and especially in the Learning segment, is there anything that specifically that explains this or is it just the seasonality and maybe the year over year trend? Speaker 200:27:20Yes, it's Kevin. So really no core cause here. Some of this is just frankly timing and pace with regard to look at military spending and military contracts, at times they can take longer. It's no real cyclical element to that. So you know, any order can be up, it can be down. Speaker 200:27:36So I think right now, I wouldn't read more into that other than we're just dealing with timing and certain elements. The pipeline remains strong from a sales perspective across all of our segments. And I expect that as we continue throughout the year, we'll have still strong sales supporting our record results for this year. Speaker 600:27:54Thank you. That's helpful. Maybe just a last one on the resignation of Sasha in the IT segment. Is there a certain timeline and the type of process that you want to run versus internally, externally, maybe just a bit more color on that. That's it for me. Speaker 200:28:08Yes. Thanks. I want to reiterate, we're obviously I want to reiterate and thank Sasha for his time here and a lot of great things in our segment. We've built a great team underneath Sasha And he's built a great team underneath him. So I'm very confident in our ability to maintain the trajectory, and he's got a great opportunity with the CEO level role in another So again, I wish them all the best. Speaker 200:28:31From a process perspective, the way we run this for anyone who reports directly to me, we will run a process for both internal and external candidates we'll be kicking that off as soon as we get out of this quarter. We'll be kicking that off very shortly and we'll stand by as soon as we have an update. We'll let our shareholders know our new direction going forward. Appreciate it. Congrats again. Speaker 200:28:57Thank you. Appreciate the call. Operator00:29:01Thank you. We have reached the end of our question and answer session. So I'll now turn the call back over to Mr. Ford for any closing comments. Speaker 200:29:12Thank you, Ali, and for facilitating today's call. And on that note, I want to thank each and every one of you for attending and looking forward to providing you an update Operator00:29:29this concludes today's conference. You may disconnect your lines at this time and we thank you for your participation.Read morePowered by