- Q4 Revenue Growth Revenue rose 12% to $203M, driven by 6% organic growth and double-digit Defense Solutions expansion.
- Adjusted EBITDA Surge Q4 adjusted EBITDA jumped 32% to $24M, outpacing revenue growth.
- Backlog Expansion Total backlog hit $1.4B, with $1B in defense, signaling strong future revenue visibility.
- Major Contract Win Secured a $30M+ antenna contract with a global space company, deliverable over 24-28 months.
- Guidance for FY2026 Targets 10-15% annual revenue growth and double-digit adjusted EBITDA growth, leveraging defense and M&A opportunities.
Segment Performance and Outlook
The company's Defense Solutions segment drove the growth, with double-digit revenue increase. The ITCS business had a soft first half but showed signs of improvement towards the end of the year, entering the new year with a significantly higher backlog than the previous year. The company's guidance assumes mid-single-digit organic growth with some acquisition contribution from AMS and InField. As per the company's President, Patrick Houston, Calian is targeting high-growth vertical markets and has a U.S.-focused subsidiary to target federal defense.
Growth Strategy and M&A Pipeline
Calian has a strong pipeline for M&A and is engaged in multiple discussions, focusing on defense and space. The company has a VENTURES program to engage small and medium enterprises in the defense agenda. The company's target is to achieve annual revenue growth of 10-15% over the next several years, with double-digit growth expected in both revenue and adjusted EBITDA for FY '26. Analysts estimate next year's revenue growth at 10.1%, aligning with the company's targets.
Valuation and Metrics
Calian's current valuation metrics show a 'P/S Ratio' of 0.82 and an 'EV/EBITDA' of 14.72. The company's 'P/E Ratio' is -942.23, largely due to the low earnings in the previous year. The 'Dividend Yield' is 2.07%, providing a relatively stable return to shareholders. The 'Free Cash Flow Yield' is 7.93%, indicating a healthy cash generation capability. With the company's growth prospects and improving profitability, the current valuation appears reasonable.
Defense Spending and Opportunities
The company is optimistic about the Canadian government's increased defense spending and is well-positioned to support various aspects of the new agenda. Calian's defense industrial strategy is being formulated to benefit from the federal government's increased defense spending. The company has a strong relationship with the RCMP and expects growth momentum with them in the next couple of years. The recent antenna contract with a leading global space company exceeds $30 million and will be delivered over 24-28 months, further bolstering the company's prospects.