Calian reports Q1 results
Revenues for the quarter were $51.8 million, an 11% decrease from the $57.9 million reported in the same quarter of the previous year.
Net earnings were $2.8 million or $0.38 per share basic and diluted, compared to $3.4 million or $0.45 per share basic and diluted in the same quarter of the previous year.
"We have mixed feelings about the first quarter results released today. While we did expect a contraction in revenues, the extent of curtailment in government spending was more than anticipated. Certain programs have been delayed while others were cancelled, providing for a very unpredictable business environment. These effects have been felt in varying degrees by both of our divisions. While we fully appreciate the benefits associated with the present level of diversification within our current business, we also recognize the need to evolve further as growth in other sectors is paramount to fend off the effects of the present down-cycle in government spending. Our acquisition of Med-Team along with the ongoing development of a portfolio of ancillary communication products are definitely steps in the right direction" stated Ray Basler, president and CEO.
"Overall consolidated gross margin percentages were in line with the prior year with SED showing an improvement while BTS experienced a decline. Had SED margins not benefited from the recovery of investment tax credits related to activities in a prior year, overall consolidated margins would have been slightly lower than the same period last year. BTS margins continue to be challenged by intensified competition for new work. For the near term, we expect that margins on new work in both divisions will continue to be under pressure. While we will continue to seek ways of realizing cost savings, we also recognize the importance of investing in business development activities to evolve our service lines for the attainment of future growth" continued Basler.
"Despite the ongoing difficulties associated with our present business environment, we continue to generate substantial profits and cash flows. This allows us to maintain our healthy dividend and still take advantage of beneficial share buy-back opportunities through our normal course issuer bid. At the same time, we have a very healthy balance sheet and will remain on the lookout for acquisition opportunities that could economically and strategically enhance our service offerings or our competitive position" stated Basler.
While the decrease in the company's first quarter performance was somewhat expected, we now anticipate that it may take longer than initially foreseen to experience a rebound in certain market segments. In particular, the continued roll out of the cost cutting initiatives by both the federal government and DND may limit available opportunities and increase competitive pressures thereby negatively impacting short term projections for both revenues and profitability.
Ultimately, revenues realized will be dependent on the extent and timing of future contract awards as well as customer utilization of existing contracting vehicles. Based on currently available information and our assessment of the marketplace, we expect revenues for fiscal 2014 to be in the range of $220 million to $240 million and net earnings in the range of $1.55 to $1.80 per share.