Calian Group Ltd.

Greetings and welcome to the CALIAN second quarter 2021 conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during today's conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn this conference over to your host, Mr. Kevin Ford, CEO of CALIAN Group. Thank you, sir. You may begin.

Thank you, Laura. Good morning, ladies and gentlemen. With me this morning is Patrick Houston, our CFO, and we'd like to welcome you to Callion's second quarter 2021 conference call. Please note that certain information discussed today is forward-looking and subject to important risks and uncertainties. The results predicted in these statements may be material different from actual results. It is my pleasure to announce the highest quarterly revenue in the company's history. Calian's second quarter consolidated revenue was $138 million, a new record result in the company's history and represents an increase of 33% from the same period last year. I believe these results demonstrate the company's continued strength in a quickly evolving environment and showcases our four-piston engine running in all cylinders. Our efforts to further diversify our sources of revenue continue this quarter. Revenues from Canadian government customers were 53% of total revenues on a year-to-date basis. And you can see the progress that we've made in just over a year, where revenues from the Canadian government represented 69% of our total revenues. A diversification has seen strong results from entering new market verticals as a result of acquisitions that operate in new sectors and international growth. Europe has been a particular highlight in the past quarters, European revenues have increased by 167% for the six-month period due to strong contributions from our learning and advanced technology segments. We also increased our profitability ratios this quarter, posting higher gross margins and EBITDA margins. And as a reminder, this quarter marks our 78th consecutive profitable quarter. That's over 19 years. All four of our segments delivered growth this quarter when compared to the same time last year, which at the time represented a new record high revenue performance. The ongoing public health crisis has created challenges and opportunities. As CEO, I must acknowledge my team who have risen to the challenge to maintain our manufacturing capabilities through health measures and a very challenging supply environment, continued travel to customer sites to deploy satellite ground systems, and support our customers virtually. This acknowledgement extends to our health professionals as well. For example, over 200 nurses are working across five clinics located in GTA hotspots and will vaccinate over 26,000 individuals. In Northern Ontario and Musinee, our nurses vaccinated 25,000 residents of First Nations elder care homes and members of Indigenous communities. The team has also embraced the opportunities presented by increased demand from existing and brand new customers and delivered county's traditional high quality. Their efforts have been the driving force of our performance. I'd like to spend a moment to provide an update on each of our segments. Our health segment saw another quarter of tremendous growth. Revenue has increased by 64% compared to the previous year. This is the result of multiple initiatives, the first being the tremendous demand for our services across Canada. Having the ability to deliver high-quality healthcare services has become paramount in this environment. Our expertise and reach have allowed us to respond quickly to our customers' evolving needs. This includes varied mandates, including screening, vaccine delivery, procurement of healthcare products, and primary care. The demand in this sector is coming to us quickly, and often with very little notice. Second, our continued growth in pharmaceutical services through our fiscal year 20 acquisition of AlioHealth. This division has been part of Calium for just over a year, and we continue to show growth in Canada, and more recently in Europe and the United States. Our information technology group achieved growth of 46% in revenues this quarter when compared to the previous quarter. Our acquisition of Deposoft midway through the quarter was a major contributor. Additional contributions from MSEC resulted in total acquisitive growth of 30%. Yearly contributions from both entities are enabling our information technology segment to grow into new markets and reach new customer segments. Our learning segment has seen growth of 21% in the current quarter. Our acquisitions of CTS and Cadence, both located in Europe, continue to contribute strong revenue in EBITDA and provide revenues outside our Canadian military specialty. Our historical footprint of customers have resumed operations, and we have seen limited interruptions since we adopted our various delivery models this time last year. We expect demand to remain strong as these customers try to make up for some of the interruptions in their programs during 2020. Finally, our advanced technology segment demonstrated growth of 7% overall, which highlights the strength and diversity of the advanced technologies portfolio. Acquisitive growth was 11% in the quarter, and contributions from Talisman continue to be strong. We are very excited about the direct relationship they have formed with new customers, in addition to the well-established global distribution network. Revenues in our traditional ground system satellite business has decreased year over year, as we are in the final quarters of deployment of our large North American deployment. I will now ask Patrick to review the quarterly numbers. Over to you, Patrick.

Thank you, Kevin. Our performance across revenue growth, increased margins, and increased profitability are important achievements. We have strived to do this consistently over the last few years, and this quarter's profitability performance is particularly impressive given the 33% revenue growth. Organic growth for the first quarter was 21%, and acquisitive growth contributed 12%. We also completed the largest acquisition in the company's history with Davis Soft partway through our second quarter, as well as Inertronics in early January. We are already seeing strong results from Davisoft and Inertronics has a pipeline of significant projects that we are very excited about. Our ability to win new contracts with existing and new customers continued with new signings of 138 million in the quarter. Our realizable backlog at the end of our quarter now stands at over $1.4 billion. We saw good progress among many key performance indicators, including revenue, gross margins, EBITDA, and adjusted net income. Gross margins ended the quarter at 24%, which was increased by 2% from the same quarter of the previous year. Our acquisitive strategy has demonstrated the ability for M&A to contribute and meaningfully impact our consolidated gross margins. EBITDA for the first quarter of 2021 was 39% when compared to the same period of the previous year. which also includes one-time operating expenses from M&A costs of approximately $2 million. This brings our EBITDA percentage above 10% for the quarter. Adjusted net income, which reflects the impact of depreciation, IFRS 16 lease accounting and income taxes was up 52% when compared to last year. Our balance sheet remains a strength with net cash at $65 million. Between the cash on hand and our $80 million credit facility, our total liquidity position now stands at $145 million. We continue to see this as a strength as we continue to execute our strategy of investing for consistent organic growth and accretive M&A transactions. I'll now turn the call back over to Kevin.