Calian Group Ltd.

Q3 revenue was a record $230 million, up 20% year over year. Gross profit rose 17% to $78 million from $67 million, and adjusted EBITDA increased 35% to $26 million; adjusted EBITDA margin was 11.1% versus 9.9% last year. Revenue grew 16% organically, while acquisitive growth contributed about 4%. For cash flow, operations generated $24 million versus $25 million a year ago, and operating free cash flow increased 46% to $18 million with 69% cash conversion; year-to-date operating free cash flow was up 57% to $55 million with 72% cash conversion. Balance sheet leverage ended at 0.9x net debt to adjusted EBITDA, with net debt of $95 million and $141 million drawn on the debt facility. For fiscal 2026, management expects revenue growth in the mid-teens and adjusted EBITDA growth in the low 20% range. They also said working capital should finish the year in the $15 million to $17 million range and CapEx should be slightly north of $10 million.

Patrick Houston framed the quarter as evidence that Calian is being repositioned from a services company toward a platform company in mission-critical markets. He highlighted defense, the Arctic, sovereign AI, multi-orbit connectivity, and nuclear as areas where Calian is adding capability, and pointed to the 15-year Raytheon U.K. renewal as validation of the strategy. His tone was upbeat and confident, but he repeatedly stressed that the company is investing ahead of the opportunity and preparing for larger, more complex contracts.

Will Majic said Q3 showed the benefit of disciplined execution in a favorable market, with record revenue, record gross profit, and record third-quarter adjusted EBITDA. He explained that cash from operations was $24 million, slightly below last year because of higher working capital, but said the increase in receivables was a timing issue tied to strong demand, not structural. He also noted net debt of $95 million, leverage of 0.9x, $3 million of CapEx, $3 million of dividends, and that Galaxy Broadband should close in the next few weeks for $24 million upfront. On guidance, he said FY26 outlook improved again, with higher investments expected in Q4 and FY27, working capital usage tracking revenue growth, and the NCIB set to be renewed.

Analysts focused on the Raytheon U.K. contract, asking about the scope, cadence, and variable upside; management said it extends the existing British Army training relationship for 15 years, with a base commitment and a variable component that could be roughly the same size as the base, effectively doubling the deal value. Questions also centered on margin sustainability, M&A pace, capital structure, and whether the recent growth is repeatable; management said some Q3 organic growth benefited from timing and unusually strong technology-solution demand, so the long-term organic target remains mid-single digits. On the defense pipeline and renewals, management said major anchor contracts generally do not come up until 2027 or later, with more activity in 2028-2029, while Europe defense investments and larger Canadian programs should support future growth.