Calian Group Ltd.

Good morning, ladies and gentlemen, and welcome to the CALIAN fourth quarter 2021 conference call. At this time, all participants are on a listen-only mode, and the floor will be open for your questions and comments following the presentation. It is now my pleasure to turn the floor over to your host, Kevin Ford, Chief Executive Officer. Sir, the floor is yours.

Thank you, Catherine, and good morning, everyone. With me this morning is Patrick Houston, our CFO, and we'd like to welcome you to CALIAN's fourth quarter and 2021 full-year results 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 materially different from actual results. I'm going to start with our fourth quarter results, and the fourth quarter saw revenue of $128 million, a 4% increase compared to the same period last year. Adjusted EBITDA and adjusted net profit grew year over year at 35% and 54% respectively. We have continued to see momentum in new contract signings this quarter with $84 million in new wins, leaving us with a solid backlog of $1.3 billion. Dividend levels remain unchanged at $0.28 per share. And as a reminder, this quarter marks our 80th consecutive profitable quarter. That's over 20 years of profitable execution and delivery. I'm thrilled to share for the first time in company history, we have passed the half billion dollar mark with annual revenues of 518 million. This is a major milestone for Callion on our journey to become a billion dollar innovative global growth company. COVID-19 has presented many challenges, particularly around maintaining our manufacturing capabilities, traveling to customer sites, and supporting customers virtually. And I'm pleased we were able to achieve this milestone even during a difficult time. Adjusted EBITDA and adjusted net profit increased by 41% and 58% respectively. And at 24%, gross margins are the highest they've ever been. Another point of pride for our team. Our net cash has grown threefold year over year, and EBITDA margins are now above 10%. Our success in fiscal 2021 can't be told through numbers alone. We acquired three new companies, bolstering our capabilities in areas such as cybersecurity and high-performance antenna capabilities, and allowing us to expand our customer base. Calium was named to the FP500, a ranking of the top 500 largest Canadian companies by revenue, and we were added to the TSX Small Cap Index. We've continued to add new leaders to help propel the company forward. This included Michelle Bedford, our Chief Commercial Officer, Sean Hamer, our Chief Technology Officer, and Sasha Guerra as President of IT and Cyber Solutions. We have also made significant contributions to our communities. We are a key partner in Canada's response to COVID-19. We support indigenous communities with remote healthcare. We continue to deliver a military family doctor network and assist over 20 charities. Our efforts to diversify our revenue has shown tremendous progress. Just a few years ago, almost 70% of our revenue came from government customers at the federal, provincial, and municipal levels. While we have continued to grow our government revenue, our efforts to diversify into commercial and international segments have resulted in significant growth, and the revenue split is now 50-50 between traditional government sources and commercial customers. I'd like to spend a moment sharing an update on each of our segments. If you've been on one of these calls before, you've heard me mention our four-piston engine and how growth in one segment balances the potential decline in another. It is my sincere belief that this four-segment structure, as well as our four-pillar growth framework of continuous improvement, customer diversification, customer retention, and innovation, are key ingredients to our success. Three of the four segments delivered double-digit revenue growth this quarter. IT and cyber's impressive revenue growth of 61% was led by the contribution of the newly acquired Davis Ops and iSecurity companies. For advanced technologies, advanced technologies are the segment that has been most impacted by COVID-19. With supply chain challenges and travel restrictions delaying completion of some projects, and despite this, advanced technologies saw increases across the board in revenue, EBITDA, and gross margin. Acquisitive revenue makes up 77% of the total increase and is attributable to revenue from the acquisitions of Intertronic and Talisman. In addition to acquisitive growth, advanced technologies have demonstrated growth in agtech product sales and continued expansion and growth in European ground system products. For health, while revenue decreased 22% this quarter as a result of the one-time deployment of mobile respiratory care units in Q4 of 2020, revenue grew 20% for the year. Demand for high-quality healthcare services has increased during the pandemic, and CalUnion has been engaged for a variety of services across Canada, including vaccinations, screening, quarantine support, and virtual clinic setup. As an example, county and nurses support a 1-800 hotline that offers COVID-19 screening, complete contact tracing, and public health education for Nunavut residents. These are critical services for residents who live in remote areas as a far distance from healthcare services. For learning, revenue growth and learning was strong both in the quarter and the year. The team has embraced both in-person and virtual delivery of its learning platform, and growth in the fourth quarter was 23% when compared to the same quarter last year. Just after the fiscal year end, we announced the acquisition of Simfront, a leader in immersive training solutions, incorporating augmented, virtual, and mixed reality technologies. Now we can offer customers an end-to-end military training and simulation solution with opportunities not just in defense, but in healthcare and oil and gas. For IT segments, the IT and cyber solution saw the largest increase in revenue growth with 52% related to acquisitive revenue. This demonstrates that the capabilities and assets from our acquisition of Dapesoft and iSecurity are indeed transforming our IT segment. Another proof point is the 2021 Microsoft Canada Healthcare Impact Award. presented to Dapesoft for the Corolla Virtual Care Solution, a solution that helps acute care providers quickly roll a premium virtual clinic services. All in all, we see multiple new growth opportunities across all of our segments and are excited about the momentum we have created this year. Now, I'd like to pass it to our CFO, Patrick, to discuss results and key performance indicators.

Thanks, Kevin. We have several important achievements in the fourth quarter, including increases across the board in revenue, adjusted EBITDA, and adjusted net profit. This performance can be largely attributed to investments we have made in each of our segments to bring technology and differentiated services that resonate with our broad customer base. Acquisitive growth in the quarter was 8% and 12% for the entire year. The acquisitions we have completed during our fiscal year have all been meaningful contributors. Organic growth in the quarter was negative 4% and 8% for the entire year. Passing the half-billion-dollar revenue mark is a major milestone for Callion, and growing gross margins and EBITDA margins ahead of revenue speaks to our profitable growth agenda. Gross margin performance in the quarter was strong, reaching 26% compared to 19% in the same quarter a year ago. The improvements in EBITDA of 35% and adjusted income of 54% significantly outpaced our revenue growth in Q4. Our balance sheet remains a strength. We ended the quarter at $78 million in cash and a credit facility of $120 million, which is still undrawn. We completed three acquisitions during FY21 and have already successfully closed one acquisition in FY22. We continue to invest in our team to facilitate further investments in M&A, and our pipeline of deals is as busy as ever. I'll turn the call back over to Kevin.