Calian Group TSE: CGY reported record second-quarter revenue and sharply higher adjusted EBITDA, with management pointing to accelerating demand in defense and space markets, improved execution and recent acquisitions as key drivers of the quarter.
On the company’s fiscal second-quarter 2026 earnings call, CEO Patrick Houston said the results marked “a clear inflection point for Calian,” citing 18% revenue growth, including 12% organic growth, as well as CAD 321 million in new contract awards during the quarter. More than CAD 200 million of those awards came from the Canadian defense sector, spanning multiple solution areas.
Houston said the quarter’s awards lifted Calian’s backlog to CAD 1.5 billion and provided “strong visibility into future growth.” Over the past 12 months, the company has secured more than CAD 550 million in defense contract signings, bringing its defense backlog to more than CAD 1 billion.
Revenue and EBITDA Rise on Defense Demand
Acting CFO Will Majic said second-quarter revenue increased 18% year over year to CAD 229 million, a record for the company. Acquisitions contributed 6% growth, primarily from AMS, completed in May 2025, and InField Scientific, completed in October 2025. Organic revenue growth was 12%, which Majic said was reflected across both operating segments.
Gross profit rose 24% to CAD 80 million, also a record high, compared with CAD 65 million in the same period last year. Gross margin increased to 35.1% from 33.4%, which Majic attributed to a higher mix of product solutions in the quarter. He cautioned that revenue mix can vary quarter to quarter, which may cause reported gross margin percentage to fluctuate.
Adjusted EBITDA increased 60% to CAD 28 million, outpacing revenue growth. Adjusted EBITDA margin rose to 12.2%, compared with 9% in the prior-year quarter. Houston said the improvement reflected higher volumes, better execution and a more focused operating model.
Defense & Space Segment Seen as Growth Engine
Calian’s Defence & Space segment delivered 15% revenue growth in the quarter, driven largely by organic performance and demand across technology solutions and operational readiness services. Houston said the company secured new awards, extensions and program expansions in areas including training, health services, IT and cyber, space communications, manufacturing and engineering.
Houston described Defence & Space as an increasingly important growth engine for Calian, saying the company is working to position itself for broader mandates and larger programs. He said Calian is integrating capabilities across training, space, nuclear, health, manufacturing, IT and cyber to pursue more cross-functional opportunities.
The company also highlighted activity in space-related offerings, including precision location capabilities for the Arctic, software supporting next-generation low-Earth orbit constellations and deep-space antenna solutions. Houston said those deliveries demonstrate the growing relevance of Calian’s space capabilities in mission-critical environments.
Internationally, Houston said Calian plans to increase its focus and investment in Europe in the second half of the year through targeted spending on talent, infrastructure and technology. In response to an analyst question, Majic said those investments could contribute to some margin compression compared with the first half, but management views Europe as a long-term growth opportunity.
Essential Industries Improves, Helped by Acquisitions
Calian’s Essential Industries segment posted 25% revenue growth in the quarter, led by the contribution from AMS. Houston said the acquisition has expanded Calian’s presence in the Arctic and provides a platform for its broader strategy in a region of increasing importance to customers.
The segment also returned to organic growth after a slower start to the year. Houston said organic revenue growth accelerated to the high single digits in the quarter, reflecting improved demand across parts of the portfolio and early signs of recovery in the company’s U.S. commercial business.
For the first half of fiscal 2026, Essential Industries revenue rose 22% and adjusted EBITDA increased 70%. Houston said the segment remains an important part of Calian’s strategy through its work in health, energy and other sectors where reliability and operational performance are critical. He said management is focused on delivering margin expansion through efficiencies and operational improvements, with a goal of exiting fiscal 2026 at high single-digit margins in the segment.
Cash Flow, Balance Sheet and Capital Allocation
Calian generated CAD 1 million in cash flow from operations in the second quarter, down from CAD 10 million a year earlier. Majic said the decline was primarily due to increased working capital requirements, mainly higher accounts receivable, which partially offset stronger profitability. He said the company invested in working capital to respond quickly to technology solutions demand and expects receivables to normalize and convert to cash in upcoming quarters.
Operating free cash flow increased 119% to CAD 21 million, representing 77% of adjusted EBITDA. During the quarter, Calian funded CAD 4 million in capital expenditures, paid CAD 5 million in earn-outs related to the AMS acquisition and returned CAD 3 million to shareholders through dividends.
As of March 31, 2026, Calian had drawn CAD 167 million on its debt facility and reported net debt of CAD 111 million. Its net debt-to-adjusted EBITDA ratio was 1.2 times, below its 2.5-times threshold. The company also exercised CAD 75 million of the accordion feature on its credit facility, increasing total committed capacity to CAD 275 million. Majic said Calian has approximately CAD 240 million in available liquidity.
Majic said acquisitions remain Calian’s top capital deployment priority, adding that the M&A pipeline is robust and includes multiple active discussions. The company also remains open to share buybacks on an opportunistic basis, while its dividend policy remains unchanged for the rest of fiscal 2026. Management plans to review the dividend payout level with fourth-quarter results in November.
Outlook Strengthens for Fiscal 2026
Management said Calian’s fiscal 2026 outlook has improved since the prior quarter. The company now expects low-teens revenue growth and high-teens adjusted EBITDA growth for the year, supported by momentum in Defence & Space and Essential Industries and full-year contributions from AMS and InField Scientific.
Majic said the first half of fiscal 2026 showed revenue growth of 15% and adjusted EBITDA growth of 44%, but he cautioned that the second quarter is typically seasonally strong and may not reflect the pace for the remainder of the year.
During the question-and-answer portion of the call, Houston said Calian’s medium-term growth strategy rests on three pillars: doing more with existing customers, bringing solutions together to bid on larger opportunities as a prime vendor and continuing acquisitions. He also said defense demand is accelerating, particularly as governments increase spending. In Canada, he said recent moves toward higher defense spending targets represent early signs of opportunity, though “there’s still lots of progress there to go.”
Houston also said increased Canadian Armed Forces activity in the Arctic and Europe could support Calian’s training, health and operations businesses. He said Calian has supported Canadian forces in Latvia and participated in Arctic exercises, where it demonstrated technologies with partners.
“Defense and space markets are accelerating, critical infrastructure needs are expanding, and customers are looking for trusted partners who can deliver in complex, high consequence environments,” Houston said in closing. “I believe Calian is well-positioned to meet that need.”
About Calian Group TSE: CGY
Calian Group 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.
This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.
Before you consider Calian Group, you'll want to hear this.
MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Calian Group wasn't on the list.
While Calian Group currently has a Buy rating among analysts, top-rated analysts believe these five stocks are better buys.
View The Five Stocks Here
The space race is growing fast, and you don’t have to wait for SpaceX to go public to invest. This report shows seven space stocks you can buy today that may grow as rockets, satellites, defense, space internet, and new space technology become more important.
Get This Free Report
