This Canadian company wins and maintains repeat contracts thanks to its hardware, software and skilled professional workers.
The expected revenue from just one recent agreement should contribute 10% to 15% of its annual revenue through 2020. The company also has repeat contracts with big government agencies like the Canadian air force. That revenue supports a solid dividend, currently yielding 3.6%. In addition, the company’s p/e is less than 13 times its projected 2018 earnings.
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CALIAN GROUP (Toronto symbol CGY; www.calian.com) has two main divisions: Business and Technology Services (contributing 70% of the company’s revenue) provides engineers, health-care workers and other skilled professionals on a contract basis; and Systems Engineering (30% of revenue) sells hardware and software for testing, operating and managing satellite and other communication systems.
The company recently won a multi-million-dollar contract for the provision and installation of satellite ground systems. The agreement is for several ground systems, some of which incorporate advanced technologies. Project work is expected to begin immediately and run into fiscal 2021.
For fiscal 2019 and then fiscal 2020, Calian expects the contract to generate revenue equal to roughly 10% to 15% its total annual revenue. To put that into perspective, the company reported total revenue of $275.4 million in 2017.
In April 2018, Calian won a $20 million contract renewal to support the Royal Canadian Air Force’s (RCAF) Airworthiness Program.
Calian provides skilled professionals with expertise in 66 different categories of aeronautics to help Canada’s military fleet fly safely and effectively. The first year of the contract will run to March 31, 2019. The agreement includes the option for two additional years and carries a total value of roughly $20 million.
The company will initially provide professional airworthiness, engineering and program support services through a team of about 30 specialists. They include civilians and veterans, who will work on mechanical engineering, propulsion, electrical engineering, weapons safety and cybersecurity.
Value Stocks: Business from Canadian federal government repeat orders up 13%
In its fiscal first quarter, ended March 31, 2018, Calian’s revenue rose 15.0%, to $77.1 million from $67.1 million a year earlier. The company earned $3.9 million, or $0.50 a share. That’s down 7.7% from $4.2 million, or $0.55, a year earlier. The lower profits came from higher marketing expenses to win big new contracts as well as additional costs to improve and expand its facilities.
Calian’s Business and Technology operations continue to service repeat orders from several Canadian federal departments. They include the Department of National Defence and the RCMP. Overall, revenue for this business rose 13% in the latest quarter.
Revenue at the Systems Engineering business rose 23%. The operation continues to win contracts with the Canadian Space Agency to provide support for its satellite operations.
Calian holds cash of $20.9 million, or $2.71 a share. It has no debt. The stock trades at 12.7 times forecast 2018 earnings of $2.15 a share.
The company pays a quarterly dividend of $0.28 for a high 3.6% yield. Calian raised its dividend five times between 2010 and 2012; it has that payment steady since then.
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