Calian Group Ltd. (CGY) Earnings Call Transcript & Summary

Welcome to the 2022 Calian Investor Event. I'm your host for the day and Calian, Chief Commercial Officer, Michele Bedford. This morning, we're broadcasting live from Calian headquarters here in Ottawa. So what can you expect from today's event? Well, first up will be an interview with Kevin Ford, our CEO. Following Kevin's remarks, we're going to hear directly from the teams. They are so looking forward to showing off some of our newest technology and platform offerings. Patrick Houston, Calian's CFO, is also here with us today. He will join us in the second half of the program to share his perspective on where Calian is going. Patrick will then join Kevin for a live Q&A. This is a low-stress hour for you. Notes are being taken care of by our partners from Sketch Effect. So you'll be able to see on screen for a moment. They're just getting started capturing highlights from the session. Following the event, we will share the digital drawing from Sketch Effect, the 4 demos you'll see referenced today and the full recording. So a few housekeeping things before we get started and into the core of the content. If you're looking for closed captioning, it's in the bottom left-hand side of your screen. If you experience any technical difficulties with the event, please click on the little help icon at the bottom right of your screen. Someone will be there in seconds to assist. And finally, please use the chat function on the right-hand side of your screen to send us questions for the live Q&A, we're hosting towards the end of the hour. It's going to be super flat and boring if there are no questions for the Q&A. So with our housekeeping complete, it's time to talk to Kevin. Kevin, welcome to the Calian Investor Event 2022.

Thank you, Michele. I'm excited to be here. It's a day, I had circled in the calendar. Great to be here. Looking forward to the event.

Excellent. And I was doing a bit of research before the event. I think you're coming up on 7 years as CEO. Is that right?

That's correct. That's correct.

So during that time, revenues grew from $240 million to $518 million, and we're now headed to over $600 million. Similarly, the company's market cap has grown from $136 million to $650 million. It's a 380% increase. Where do you go from here? Like what is the next phase for Calian?

It's a great question. And first of all, it's important for me to state just how delighted I am with how the company is performing. Moving forward, we will need to sustain our momentum. We're going -- we're on track right now for 3-plus years of 20% growth and improving our margins. I've stated in the past that Calian was in the middle of a pivot to an innovative global growth company. I believe we've accomplished that pivot. You will see today we have completed the pivot with technology now embedded in all that we do and exposure to global markets. Now it's about scaling. Today, you'll see some of the amazing talent and platforms that will enable us to scale. We need to empower our teams to bring new ideas and innovation forward and harness their energy. In short, we need to keep doing exactly what we have been doing, Michele, which is to deliver again and again and again exceeding our customers' expectations and creating excellent return for our shareholders. I'm confident that when we say we're on track to be a $1 billion company, you can count on us to actually deliver those results.

I love that. And I'm with you on the $1 billion journey. I also agree that the company's history is so impressive. We have a proven track record of building customer and investor confidence. Customers are confident Calian will solve their problems. Investors are confident Calian will grow and be profitable. And one of the things I do love about that $1 billion revenue ambition is that it represents not only a doubling of revenue, but it doubles the number of customers we can help and the number of problems we can solve. These are complex challenges no other company is poised to address. Now that said, from your perspective, is getting to $1 billion only a matter of doing more of what we've done so far? Or is the Calian strategy evolving to meet this new goal?

Again, great question. First and foremost, I think we must continue to embrace our core purpose, which is more often relevant than ever it's ever been with today's world, helping the world communicate, innovate, learn, lead safe and healthy lives. What has been validated over the past 2 years is that is what we do, and what we do is essential and critical to our customers. There's no question what we do matters. We need to continue to evolve our strategy. Our 4-pillar framework has proven to be effective: customer retention, customer diversification, and innovation, and continuous improvement. The core of our strategy is our people. We often don't say that enough. The core of our strategy is our talent, and we have not only amazing team that steps and rises to the challenge every day, but we are also bringing a lot of new and diverse talent into the company, which is also very exciting. We need to also look at our business models and specifically looking at recurring revenue opportunities. And you're going to hear more of that, frankly, through today and specifically with Sacha, when he talks to the IT and cyber evolution. We obviously need to sustain our pace and scale, and we need to meet public and private sector company expectations on our growth. Frankly, at the end, we also need to deploy capital effectively, and that's what we've been doing over the last 6 years, and that's exactly the plan moving forward.

Absolutely. And I love that you touched on the Calian core purpose. So I'm not sure if I shared this with you, but it's that Calian commitment to solving complex problems, the health of Canadians, economic prosperity of Canadian businesses, communication systems that are critical to people around the world, wanting to move the world forward is why I chose Calian. Now we're on today with lots of investors. They also have choice in front of them, right? Thousands of options on the U.S. and Canadian exchanges. Why should they choose Calian?

First of all, I think it's important to take a look at our track record and where we've been. We've accomplished so much in the last 6 years. We've doubled the revenue of the company. We've tripled the value of the company. We've lived through 2 years of a global pandemic and have delivered record results. Looking forward, Calian is only one of the very few, if not the only company, and investors can get access to 4 very distinct businesses: a domestic and global customer base, a pristine balance sheet to invest in organic and M&A growth, over $1 billion in contract backlog, and an aggressive growth strategy to bring more innovation in all that we do and looking at new revenue models across all that we do, not to mention the convergence opportunities between our business units. And of course, yes, we also pay a dividend. I probably could also mention incredibly talented good-looking CEO, but I'm going to leave that one off the table for now because I'll let people vote on that one.

It sounds good. Well, and certainly, Calian's -- you're one of the reasons I joined too. Kevin, thank you so much for sharing your vision for Calian and the opportunity Calian presents for investors. Now it's time for us to hear directly from some of the team and their customers, and to show you the products and platforms Kevin referenced in his remarks. Kevin, I know I'm the official host for the day, but I also know there is no one more passionate about our digital health portfolio than you are. So why don't you introduce the first segment?

Well, thank you, Michele, for that opportunity. I appreciate that. I'm very happy to do that. The Calian digital health portfolio is so exciting to me because it represents so much of our strategy in action, and our health and IT business units working together to solve our customers' challenges. I've mentioned Calian creating technology platform for our growth. And if you've been following our announcements in the last couple of months, you'd have seen the launch of MedTech Incubator, bringing in the best and brightest of Canadian health care innovation to fill in gaps in customers' digital requirements and supporting the transition to SaaS models. The availability of Calian virtual care solution directly on Microsoft Azure through our strategic relationship with Microsoft; and the launch of Calian Nexi, a tool to automate the administration of patient support programs. I'm excited to introduce our experts in this domain to hear directly from them on our plans to move forward. You'll be hearing from Gordon McDonald, the President of Health Calian. Kaytlin Sadler, who will interview with customer at Otsuka Canada Pharmaceutical. And Tazmin Leipsig our Digital Health Solutions lead will walk us through the Calian Virtual Care Solution. So with that, over to you, Gordon. Looking forward to hearing more.

Hello. I'm Gordon McDonald, President of Calian's Health segment. I'm excited to introduce our digital health portfolio and our vision for driving digital transformation across the health care continuum. Calian is uniquely positioned to monetize the $112 billion market opportunity for digital solutions in North America. Health provider shortages in our hospitals, gaps in health care and access to that care, inefficient and siloed systems that limit innovation, these issues have reached crisis levels over the past few years. At Calian, we thrive on solving complex problems. It's our DNA. Backed by 20 years of experience in health care delivery, our digital health solutions are engineered to improve access to high-quality care delivered by expert health care professionals. Through our innovations in data interoperability and virtual care, clinical CRM, managed care and cybersecurity, we're creating a more connected, more protected health care experience. Calian has the largest, most diversified network of health care providers in Canada. Our customers are just as diverse. Calian is the trusted partner to manage complexity across the health care ecosystem. It's what we do. It's our raison d'etre. To fuel our vision of a more connected experience, we're moving health care forward from the closed siloed systems of the past to the open more agile environment of digital transformation. Our disruptive solutions create a new care pathway and improved continuity of care, generating greater value and generating more revenue. We are leading with Software-as-a-Service models, ecosystem partnerships for rapid innovation, cyber solutions to protect health care systems and technology that helps our clients leverage the gig economy.

Thank you for joining us today, Kai. Can you tell us about Otsuka and your role within the organization?

We're a pharmaceutical manufacturer, and I run the patient support programs in our mental health division.

Otsuka and Alio Health began working together in 2016 to support the Panorama Patient Support Program. Can you tell me a bit about that program?

Yes. We have 2 brands on that program, and it provides variety of services like financial assistance, home injections and patient education.

What have been some of the unique challenges that you've experienced within the Panorama patients program?

Beyond the standard challenges along with every PSP, I think that privacy has been a very big focus, especially since these programs run in mental health.

Can you tell us why you selected the Alio Health team at Calian as your partner and particularly, how the Nexi Digital Health platform has helped you achieve your objectives?

I think we both share a common goal between Alio and Otsuka, and that is to use Nexi to remove the administrative burden of these programs to allow the Alio staff to work more directly with our customers and our patients.

So together with the Otsuka, we have just launched an exciting new program called REXULTI Start. Can you tell you about that program?

Yes. REXULTI Start is our first foray into virtual care and will be providing patient counseling and education at time of prescription for our REXULTI patients.

So tell me a little bit about what the future has in-store for the Panorama Support Patient Program and how can the Nexi Digital Health platform help you improve system interoperability?

Our end goal is to have Nexi be the nexus of communication between a variety of software tools in order to make interactions with our program seamless. If you are ordering product, it should be punch some data into your system and the product gets shipped after it passes through a variety of the interim systems, all with no human interaction.

Thank you so much for your time today, Kai. We're looking forward to collaborating with the Otsuka team to support the future of the Panorama patients support program.

Thank you.

In response to the pandemic, many hospitals quickly implemented telehealth to ensure that patients could safely access timely care. These tools were often band-aids that created more work. Health care providers have to support 2 processes for in-person and virtual care, manual effort, a high risk of errors and a poor often disconnected experience for patients. A well-implemented health care ecosystem uses technology to connect care pathways creating a richer experience for patients and providers. With the broad adoption of virtual services, many organizations are planning for a future where remote care can bridge gaps in health care access, while reducing costs and adding efficiencies. The Corolar Cloud is an interoperability platform, you can easily integrate digital interactions and enable efficient connected care. Now I'd like to show you a quick video we developed with Microsoft to showcase Corolar Virtual Care and the value it brings to patients, clinicians and administrators. [Presentation]

Corolar Virtual Care, an integrated telemedicine and care collaboration platform, a Microsoft preferred solution now easy to find and purchase on the Microsoft Azure marketplace. [Presentation]

Thank you, Gordon, Kaytlin, Tazmin, the whole team. There's huge momentum building with the Calian digital health portfolio. I especially appreciate we had an opportunity to hear directly from Otsuka about the value Calian Nexi brings to their patients and their business. Now in our next segment, let's transition to the IT and Cyber Solutions group at Calian. Joining us to share his vision and strategy for the segment is the newest member of the Calian leadership team, Sacha Gera. Sacha, there is a lot going on right now in ITCS. Can you walk us through how the vision comes together?

Hello. My name is Sacha Gera, and I'm the President of IT and Cyber Security. As the newest member of the executive team, I wanted to take a minute to introduce myself. I've spent the last 20 years in the ICT industry working for large multinationals, including Nortel, IBM and CGI. Over the past decade, I worked at Ribbon Communications, where I cofounded Kandy.io, a SaaS communications platform. I look forward to working with Calian in the years to come. When I wake up in the morning, the word opportunity is what gets me out of bed. The opportunity for IT and cybersecurity has never been larger. $4.8 trillion a year is spent on the IT industry and even a couple of percentage points can be incredibly meaningful. 2/3 of companies are now adopting to cloud and there's a long way to go, and they're doing so in a rush. In fact, almost 2/3 of cyber attacks have happened over the last 2 years as companies have rushed to get to the cloud. The IT and cybersecurity business is well positioned to help customers adopt the cloud and deal with these cybersecurity challenges. Our mission moving forward is to help CISOs and CTOs and CIOs who wake up every morning and look at a picture just like this one and help them deal with their complexity. And 3 things come out of this chart. The first is a trend, where increasingly IT assets are multi-vendor in nature; two, they're multi-cloud, including public, private and hybrid clouds; and three, generally, the surface area is only expanding, and the risk of cyber attack is increasing. Here, in IT cybersecurity, we're here to help solve complexity. And our mission is to become that trusted one-stop shop with the breadth and depth of talent to help customers and clients adopt the cloud, the multi-vendor cloud and do so securely. And with our most recent acquisition of Computex, we're well positioned to enter the lucrative U.S. market with a mid-market enterprise is very ripe for consolidation and needs help. We're going to continue to build on our health care and government verticals with the expansion into other areas in the years to come. As we look towards the future, we need to keep our eye on the ball, and of course, our responsibility to the shareholders is to unlock value. Our 3-stage rocket, the sum of the parts is oriented to creating enterprise value. Our stage 1 rocket is our foundation. It's our on-demand resourcing, our solution provider and value-added resell, which is our steady-eddy business, propelling cash flow to allow us to fuel our stage 2 of our rocket, which is our cybersecurity business. Our cybersecurity business, our consulting business continues to grow, and that is opening up doors for stage 3 of our rocket, which is really our end goal, the ability to grow our recurring revenues, to grow our sticky high-margin revenues, those perpetuities, the gift that keeps giving, and we have 3 incredible announcements as we continue to amplify that. The first is around Juno360, our proprietary MDR platform or cyber platform. This platform allows us to digest big data agnostic to third parties, including CrowdStrike and Palo Alto. Digest that data, find the threats, thwart those threats and the more data our customers send us, the better job we can do of finding those cyber threats. And the more data that's sent to us, the more we can monetize the platform. This is a recurring revenue SaaS platform. We're very excited about it and where we're taking this in the years to come. Next, we have our Corolar Virtual Care platform, our digital solution for health care. This IT SaaS platform is now available on the Microsoft Azure marketplace. Building on our 20-year relationship with Microsoft, and per our recent announcement, the movement of Corolar Virtual Care, or CVC for short, on the Azure marketplace takes the friction out of procurement. Hospitals and community care centers can now try before they buy, swipe their credit card, shop, buy and consume and elastically scale per user per month and enable telehealth and virtual care sessions in a very short amount of time. We're very excited about that model. And last, we had the Computex effect. The definitive acquisition is -- the definitive agreement is now signed. We are marching towards close in March, and this is a transformative acquisition for Calian. Not only is it accretive to the top line and the bottom line, adding $75 million of revenue, but it also adds $30 million of recurring revenue, which aligns nicely with our stage 3 rocket. This is a business that's been around for 35 years, has delighted its 1,100 customers, and gives us a solid and growing base of IT and cybersecurity solutions in the United States. This offers tremendous upsell and cross-sell opportunity in IT and cybersecurity business as well as across the business units within Calian as we gain access to an outside sales force and a distribution network. And to wrap up, of course, recurring revenue is at the heart of where we're going, and Computex now offers 6 Everything-as-a-Service bundles, taking the friction out of procurement, in IT, communications and cyber. We're very excited about this acquisition. And as time goes on, I look forward to providing you updates on how we're doing on our plan and executing on this plan. And hopefully, next year, we'll get the opportunity to get together face-to-face. Thank you very much.

Goodness, Sacha, you have had an eventful first 6 months. Personally, I was blown away by the talent and innovation brought together in the MedTech accelerator. I'm looking forward to partnering with you and the team at Computex on your growth plans. Now before we connect with the team at Saskatoon and learn more about Calian's place in space, let's check it with Joe and see how our sketch is coming along. I was curious to see, oh, look, you did do it. I was curious to see how Sacha's rocket got captured. So there it is. So thank you for that. I think our sketch is coming along really well. We'll check out back in with you a little later there, Joe. Okay. Next up, we're going to hear from 2 different teams from within our Advanced Technologies segment. First up, Russ Palmer and Helen Percival are going to share how Calian software equips service providers to provide ubiquitous connectivity and communications for satellite networks. We will then hear from Allen Crawford, who will introduce us to the market opportunity of precision timing and patented antennas of the GNSS and Telematics group. And with that, let's turn things over to Russ and Helen.

Calian is the world's predominant supplier of advanced software systems for managing and operating next-generation satellite communication networks, solving complex technical challenges with Advanced Technologies and agile strategies, we help leading satellite operators and manufacturers to deliver ubiquitous connectivity on earth. From safety services to in-flight connectivity and military communications, we provide innovative software solutions to enable the world's next-generation communications. The satellite communications industry is going through a transformation, one-off long-lived missions are being replaced by flexibility. Software-defined solutions are replacing hardware-based ones, enabling the ground and space segments to adapt and expand to meet rapidly changing business cases. Calian delivers innovative software solutions to manage and control these new flexible satellite networks. Our solution architectures employ cloud infrastructure, machine learning and network orchestration, allowing service providers to control both the satellite and the ground network in real time to maximize efficiency while reducing operational costs. The world's most sophisticated communication satellite ever launched is currently rising to its final orbit. It is equipped with multiple powerful payloads. Calian working together with the satellite operator designed to develop the management systems used to operate these payloads. I will turn it over to Helen, who will describe the innovative solutions our teams engineered to address this challenge.

With the different payloads on this new satellite, we've had to solve problems in different management planes, relying on our experts in various disciplines to address each platform's unique challenges. At the high level, Calian's developed a scalable cloud-native systems deployed at the edge, used to model the network in near real time to maximize the reuse of the RF spectrum, allowing operators to squeeze even more out of their network. Zooming in, we provide enhanced management systems for the broadband network, which look at individual users to get them the connectivity that they need. These systems process tens of thousands of terminals, improving the overall utilization of the VSAT network. We tied this all together with a centralized, scalable and extensible monitoring platform that monitors the communication paths through the terrestrial network, satellite gateway stations and across the satellite payloads, allowing for single pane of glass observability of mission-critical service delivery. Here at Calian, our team is what sets us apart from our competitors. We have almost 60 years of success in the industry, and we have a great mixture of expertise, youth and experience. This teamwork is why companies come to us when they can't afford to fail.

We design and manufacture antennas along with related products such as amplifiers and splitters for the Global Navigation Satellite System or GNSS. Our sales are growing in excess of 30% per year, and our goal is to be the dominant supplier of antennas to GNSS receiver manufacturers and INS manufacturers in the world. GNSS consists of the U.S. GPS, Russian GLONASS, Chinese BeiDou, the European Galileo and the regional systems of Japan and India. Calian offers the widest range of GNSS antenna technology than any other manufacturer. Three of those technologies are patented by Tallysman, a Calian company, namely the VeroStar, the VeraPhase and the smallest dual-feed ceramic patch antennas. There are many trade-offs customers evaluate when selecting the appropriate technology. By offering this wide range, which includes the most accurate GNSS antennas on the market, we're able to offer a solution that suits most any application. There's a wide array of market verticals where antennas are utilized. In the timing market, our antennas are supplied to the largest timing appliance manufacturers and many cellular systems. Timing is critical to virtually every aspect of your life. It is essential to electrical grids, cellular networks, the Internet, stock market transactions and even determining the location of earthquakes. The deployment of 5G cellular networks is creating significant demands for antennas because the cell sites are so much smaller than legacy cellular technology. To reduce railway accidents, precise determination and location of locomotives, ends of trains, maintenance workers and vehicles reliably down to 10-centimeter level accuracy is essential. We assist rail operators in all these levels. Precision is being applied to agriculture as well. Accuracy increases farm yields, makes the most efficient use of the land, reduces the volume of herbicides and pesticides, and helps increase productivity of labor on the farm. Autonomous vehicles, which includes automobiles, trucks, watercraft, delivery vehicles, and beyond line of sight UAVs require the most accurate positioning possible. Our products and technology ensure that UAVs don't fly into places they shouldn't be. The packages are delivered to a precise location at a precise time and the vehicles don't accidentally head off the road potentially injuring passengers and bystanders. Currently, our antennas are designed into 3 fully electric vehicles with indications there will be 5 additional fully electric vehicles where our antennas will be implemented. I won't address the other verticals, except to say that as cost of precision systems decline through the use of phase tracking techniques rather than traditional code tracking techniques, new applications are made possible and new market verticals open. We expect significant growth in the agriculture, automotive, military and aviation markets. The sales funnel continues to be strong, and we have a number of very significant opportunities on the horizon. Innovation is being driven by the precision of our antennas. But Calian has expertise in not only the technology but also the understanding of the issues of antenna placement to ensure optimal performance. It's our expertise, experience and responsiveness that makes a difference every day to our customers.

Wow, every time I talk to Allen, Gord and the GNSS and Telematics team, they're always sharing some new application or new market opportunity in the precision timing market. Be sure to check your e-mail after the event, and you can see the telematics demo in action. But it's not the only exciting demo we have to share. Next up, we're going to talk to the Learning team, and they have a lot in-store for you. To kick us off, we'll hear from segment President, Don Whitty, and then we'll transition to Matt Thomas, who will both interview our customer, Ottawa Hydro, and walk us through the use of extended reality or XR, used in various simulated training environments. Over to you, Don.

Hello, I'm Don Whitty, President of Learning at Calian. For over 3 decades, Calian has been at the forefront of innovative learning solutions and technology-based training. And we've never seen a clearer picture about the future of defense training than we see right now. And that's the future of integrated synthetic training environments. With these new realities and expectations, defense training and simulation market is expected to grow from USD 12 billion now to USD 17 billion by 2029. And this is anticipated to happen across all of the sectors that we support on land, on the sea, in the sea and in the air. And the future is immersive. Where is the immersive training market going? Well, the research that we follow confirms that learning is now the largest area of focus and opportunity for extended reality or XR. We have a strong innovative bench of extended reality talent and they're very much in demand, and it's a growing market. At Calian, our approach has always been to put learning first. The attainment of the desired confidence is much more important than how it is attained. And Calian simply finds the best fit-for-purpose solution for our clients, period. Whether the solution is traditional training or a blended approach, there's no company more experienced or better equipped to deliver the new needs of this market. And these are the needs of a modern learner in the digital world. At the core for the drive of effective training are the learners themselves, and today's learner is very demanding. But the path to competence can be challenging, particularly in a work environment because a modern learner is more distracted, more impatient, overwhelmed by volumes of information. And that's where Calian's experience, guidance and technology can make a vast difference and eliminate the information overload and interference and reduce time to competency. Calian Learning, what's our plan? Well, we'll continue to deliver on our mission of providing innovative solutions that help the world communicate, learn, lead healthy lives and stay safe. We will continue our laser focus on the creation of world-class immersive learning that reduces time to competency. We'll continue to invest in technology that enables exactly what the global defense learning market is asking for integrated synthetic training environments. We'll also continue to add strategic and innovative acquisitions and partners and people to the team and bring innovation to a more diverse customer base. In 2020, we acquired CTSI in Stavanger, Norway; and Cadence, a British company. With these strategic acquisitions, we're now a well-established provider of learning and simulation to NATO and a number of NATO nations directly. Back in the fall of '21, we announced the acquisition of SimFront and SimFront brings years of experience in modeling and simulation to Calian and has a very powerful middleware technology that enables simulation systems to talk to other simulation systems as well, as operational systems. Such a tool is invaluable in the execution of complex military exercises. Calian's largest learning contract is the provisioning of operational support to the Canadian Army Simulation Center. SimFront's middleware called, VCCI, virtual command control interface, is the single tool that federates all of the simulation and operational systems for their major training exercises. SimFront also has an immersive technology division, SimWave. SimWave is led by Matt Thomas, and he's going to share with you some of the amazing things that they're doing in the real and virtual world.

Hey, I'm Matt Thomas, I'm the Head of Immersive Learning Solutions at SimFront. I've been with the company for nearly 8 years since its inception into immersive technology, where we began working with virtual reality, augmented reality and mixed reality. Looking at the value of immersive training, we know that individuals tend to learn 70% of their knowledge from experience, 20% through informal learning and 10% through informal training like classroom courses. We can access that 70% through immersive training by creating simulated experiences that replicate real life. We're able to train as much and as often as we'd like without physical restraints like actors, real equipment, trainers and training space. In fact, the only space we need is enough for a user to move their hands around. This makes training much more cost efficient because once the simulation is developed, it can be used for years without incurring any additional costs. Not only that, by using our proprietary framework called telemetry core, we can collect data from the experiences that allow us to track and measure progress. For example, we can see how long a user takes to complete a task, how many times they completed that task and how many times they fail and even more. This allows us to compare the results after multiple training sessions to see how user is improving in identified tasks. Switching gears, we'll hear from Donna and Bruce from Hydro Ottawa, one of our partners, we are developing immersive training solutions for. We'll learn more about their foray into immersive training technologies and some of the feedback they've received thus far. What motivated Hydro Ottawa to invest in immersive training?

What really motivated us to start looking at immersive training was really the changes that we saw happening in the learning and development industry. And as we looked at the ways that we were delivering training, they were pretty traditional in the classroom training sessions, which had served us very well for a long time. But as our demographics in the organization were changing, we're having younger employees coming in who had grown up in a technological world with mobile devices, with gaming, sitting in front of the PowerPoint presentation really wasn't as engaging as what they were used to. And so we started looking at more and more opportunities for new technologies, be it e-learning, be it immersive technologies to really add that level of engagement and really hands-on for our learners. The other aspect, of course, that given our industry, a lot of the work that we do are in safety-sensitive areas and specifically thinking about our apprentices in our trade schools, they work that they do in a live situation with actual live equipment is not something, it's not a learning environment of the get-go. Immersive technology has allowed us to recreate that in a safe environment where we could have somebody in a classroom, even at their work center using the technology, having the opportunity to walk through all of the steps, having a coach on the side to support them as they went through all of that, feel like they were there, but we still have them in safe environment before we put them out into an actual live environment.

Bruce, we've completed the first pilot, and we've rolled that out a little bit for some initial testing. For that experience, what has the feedback been so far from your staff?

Initial feedback on the first module we've completed has been very good. We piloted our first module with some of our apprentices, some of our experienced skilled trades, members from our union executive as well as some of our safety folks. So we got a good cross-section of impressions. Very positive feedback so far. Very impressed with the realism, how much it looks like they're real tools that they use, a real bad not transformer, a real meter on the side of a house. So they've been very impressed with the realism, the ability to go through the steps, step by step before they get their hands on live, energized equipment. That way, easy to make mistakes in the virtual reality environment with no consequences. So I'd say, overall, very good feedback so far. We're very excited. We're partway through development of the second module of SimWave. And we've got 2 more lined up before the end of the year. So very excited to get our first core done into our formal rollout into our apprenticeship programs, and we'll also be very effective for our skilled trades as refreshers for those tasks that don't get performed that frequently.

I want to leave you with 3 brief examples of some of the immersive training solutions we've developed, the first being from Hydro Ottawa, where we train Hydro staff to safely and efficiently hook up a residential meter; the next being a JTAC or Joint Terminal Attack Controller within a synthetic training environment. As you can see in the bottom right of the video, George is working from home to train to be a JTAC, where he is not only interacting with the simulation with controllers, but also through speech recognition using our speech rec software, as he's communicating with the simulated aircraft's to train the complicated phraseology. The final example showcases a VR experience within the educational entertainment space. We work with Discovery Place, a science center in North Carolina to develop an immersive learning exhibit, where users can shrink down to the size of the cell and explore the human anatomy. Since joining Calian, we've seen tremendous synergies, and we're really excited about the growing opportunities in this emerging market.

Matt, that was fabulous. I love that you were able to highlight those 3 distinct examples for us. Now again, remember everyone, after the event, you'll be able to explore a longer version of those quick snippet Matt shared with us just now. They'll all be sent in the learning demo in the e-mail after the event. Don and team, thank you so much for sharing your passion, your innovative solutions to learning challenges and your customer first commitment. And we're going to pause there on the customer first commitment because that isn't unique to the learning segment at Calian, it is a value shared across the company. Similarly, we've showcased a lot of innovative solutions this morning. We span from virtual care, cybersecurity, autonomous vehicle antenna and immersive training environments. What the solutions have in common is they're designed to help keep the world moving forward. To move forward, the world must have confidence in the ability to communicate, innovate, lead safe and healthy lives. And at Calian, we're in the business of helping our customers achieve that confidence. Now that you've had a chance to see some of our latest technology offerings, it's time to transition to Patrick Houston. After all, no investor event will be complete without hearing perspective from the CFO. Pat?

Thanks, Michele. At the conclusion of this year, Calian has achieved unprecedented growth in the previous 4 years. This level of growth has never been seen in our 35 years in business. We've managed to double our revenue by adding almost $300 million in new business. This growth been across all 4 of our segments, we are now on a different level than they were 4 years ago. Growing revenues this aggressively can sometimes have the impact of depressing gross margins or profitability. This hasn't been the case at Calian. In the last 4 years, we've managed to increase our gross margins up to 26%. We've also been able to accelerate our profitability during this time. We grew EBITDA at a rate significantly ahead of our revenue pace. And this isn't simply an accounting metric that has resulted in real cash flow. Free cash flow during our period has gone from $13 million up to $45 million this year, an increase of 255%. That was the results. But how did we achieve this combination of profitable revenue growth with expanding margins and free cash flow? We've developed a methodology and an internal capacity to deploy capital on our M&A agenda. Our approach has been to be disciplined and seek value all whilst continuing to increase our pace of acquisitions. Our M&A has been hugely accretive for each of our deals from day 1. And each of these companies has continued to grow profitably after joining Calian. Our focus on R&D and sales and marketing has been sharpened. As you've seen in this presentation, each of our segments has unique technologies and service offerings. We're continuing to invest to ensure those capabilities expand in the coming years and that our revenue pipeline continues to grow. Our efforts to diversify both organically and through acquisition has been a key strategy. We now have a significant portion of our revenue generated in Europe and the U.S. in addition to our broad footprint in Canada. We're really just getting started and you'll see more growth into new markets in the coming years. Let's take a moment to look forward. What we plan on doing in the coming years is to use the same strategy that has proved successful, but continue doing it at a greater pace and scale. We use our pristine balance sheet and available capital to continue to seek acquisitions that deliver growth, margin expansion and value. We'll continue to invest in our existing business to further differentiate ourselves and expand our service offerings. And we'll further expand in our current markets and seek new areas to bring our unique offerings. Kevin and I look forward to updating you in the coming years on our progress towards these initiatives. And with that, I'll pass it back to Michele, who will help facilitate the Q&A period.

All right. Perfect. And in fact, we have some questions for you already. Of course, Kevin, I think the first one is for you. It's from Valerie. And she's asking, how much of what we saw today is real and how much of it is in development?

Well, the great part of today is everything we show today is real. Everything we showed today is working in customer environments. They're working with customers. They're helping solve customer problems and challenges today. So from my viewpoint, I want to be clear on this. This isn't where we're trying to go. This is where we are. That's the footprint. That's the foundation. And now how do we build on that, but everything today, Val is basically in production, in customer sites as we speak.

Super. So I think this next question it's a 2-parter, so maybe you'll chime in together. So it's a question from Michael and he asks, could you discuss how Computex fits with ITCS, where the overlap is and what opportunities and scale of opportunity can be seen? And then there's a second half of the question all about growth. So maybe we'll do the first part and then I'll...

Computex. Thank you for the question. Computex is a great example, and I'm going to try and harken back to our 4-pillar growth framework. Acquisitions generally support 2 elements of our pillars, and that is customer diversification and innovation. So on the customer diversification side, what Computex is going to bring us now is that footprint in the U.S. We haven't -- we've worked in the U.S. for years, but we've never really had a strong footprint. So access to the U.S. customer base, they have -- as you heard from Sacha, over 1,000 customers, all very big customers, all customers, we think, are going to be excited to be part of the Calian family. And also, when you look at diversification in the business units, 25% of Computex revenues in the health sector. So what can we do in our health business unit and working with that team between Gordon and Sacha? So number one, diversification. On the innovation side, this is all about basically giving us more capacity and innovation. Sacha talked about our iSecurity acquisition, we did last year. Having iSecurity and Computex now come together with managed cybersecurity capability. Recurring revenue opportunities becoming stronger in both Canadian and U.S. markets as well as the capacity for talent. There's so many talented people between those organizations. And if you know the war on talent today, we're so ecstatic to have both the iSecurity, the Dapasoft and the other acquisitions a part of the Calian team. So more capacity and talent, more capacity in the context of innovation and now a diversification with a very solid footprint in the U.S.

I couldn't agree more, having met some of the team at Computex, the talent was amazing. There's a second half of the question, though. Pat, could you share a little bit about the historical growth of the business and why the selling party decided to sell the assets after owning it for such a short period of time.?

Yes. Good question, Michele. This business has been growing historically very consistently in the high single-digit, low double-digit growth, and we're certainly expecting that's going to continue with Calian and hopefully accelerate over the next couple of years. And then why they sold? AVCT, who is the parent had 2 assets and their strategic decision was to invest more capital in their other company, and the sale is part of that strategy. So we're supportive of that, and it was an opportunity for us to step in and get our footprint in the U.S.

Perfect. All right. We have another question here from Andrea. And the question is, why didn't we hear anything about ESG or we didn't hear anything about ESG today. Does Calian have plans to address ESG?

And maybe I'll take that one. So it's important element. First and foremost, I think from an ESG lens, it's important that we kind of circle back to our core purpose of helping the world lead healthy lives and stay safe and communicate and innovate. So I think, frankly, what we do every day is very socially responsible, critical and also helping the world move forward, as Michele said. We're also very proud of what we do today in the context of environment, social and governance. So we frankly didn't need the acronym. We've been working on this for the 40 years we've been in business. For example, our Military Family Doctor Network, where we've helped military families get access to health care across the country. Our environmental footprint with regard to how we actually manufacture, we've been working on this again for years. And I think what we need to do is just continue to have that story with our shareholders and talk about it, not only in the context of what we're doing. Our plans, we're going to align with the United Nations social responsibility elements. We're actually looking forward to continue to go deeper and evolve every element of that, both in environment, social and governance. So stay tuned, but we're on it. And I think we have been on it for 40 years. I think what we need to do is just make sure our shareholders and potential shareholders understand that we take it seriously. And I think you're going to see some pretty exciting stuff in that as we get more packaging around exactly what we are doing today and our plans moving forward.

Super. Thank you, Kevin. I think this next one's for you, Pat. So we have a question from Matt who's asking, as you continue to grow revenue, how do you expect the operating margin to expand?

That's a great question. I mean we've been -- part of our strategy has been to grow more aggressively, but, at the same time, continue to expand our margins, both gross margin and our EBITDA margins faster, and we've really achieved that in the last 3 years. I think the strategy is to continue to do that from a gross margin perspective. Our M&A agenda has been to buy companies with higher gross margins, bring that into Calian. And as you can see today, all the technology we're investing in is going to deliver higher gross margins. And from an EBITDA perspective, I think as we scale and continue to get from $600 million to $1 billion, that scale is going to be there, and you'll start to see that over the next couple of years. So I think margins, you'll see continue to expand consistently like it has in the last 3 years.

Perfect. All right. These questions just keep coming in. So I've got more for you. We have a question from Nick, who is asking in what's becoming a fragmented space in virtual care, how do you differentiate Corolar in the current marketplace and for the future?

I think it's important to recognize that I think the differentiation starts with how we've approached our Virtual Care Platform. With the Dapasoft acquisition and Mike and the team and you heard from Tazmin today, we've been working with the customers to develop a virtual care platform with the hospitals themselves. So what we are presenting today isn't something we're hoping to use or hoping to have customers. We have customers today that have been partners in the evolution of our virtual care platform. That's number one. Number two is the totality of our health care capability. When you think about regardless if it's a physical or virtual event that the patient is going through, you still need a qualified practitioner at the other end of that. I would say we have one of the largest, if not the largest, national network of medical practitioners in Canada across numerous categories, whether it's a psychological services, whether it's health care, whether it's dentists, nurses, you name it. So we actually can not only bring the platform, we can bring the network. Then you talk about all the other things we're doing with regard to the integration. That Corolar engine is actually working in numerous hospitals today. Again, it's not vaporware, it's actually out there and we continue to evolve it to the ongoing evolution of hospital requirements. And then you bring the cyber piece in. So I can go to the CEO of a hospital, a CEO of a health care institution and say, what is their pain point. Do they need virtual care? Do they have capacity issues? Do they have health care integration issues? Do they have cyber issues? Do they have something around the manufacturing side, frankly, that we can help with. So what's going to differentiate us is going to be not only the fact that virtual care is real and has been developed with customers in mind, it's the totality of what we can bring to that solution. And I think, frankly, for a lot of customers, we get a lot of great feedback when they see what's underway here right now with how we're integrating these platforms.

All right. I love that. And no vaporware here whatsoever.

No vaporware here. Maybe that's a theme for today. No vaporware here. I got a sure thing.

Thank you so much, everyone, for all of these questions. I appreciate the engagement and enthusiasm that made this Q&A section much more fun. Unfortunately, we don't have time to answer all the questions in our 1-hour session. I will commit to ensuring the team responds to everyone by e-mail in the days to come. Also coming in e-mail for our participants today are links to the 4 demos you heard referenced today. We want to ensure you can deep dive into your favorite innovation. In the chat window right now, you should see a link to a quick survey. Please take a minute to send us feedback. It's the only way to ensure your favorite parts from today get repeated and your least favorite parts get dropped for next year. Before passing things back to Kevin for closing remarks, I did want to check in one more time to see how things were going with our digital drawing. Joe, any luck capturing Pat's formula for growth? All right. I see you've got some there. So we're definitely growing. That's fantastic. It's there for all of perpetuity. And so with that, I'll leave things with Kevin.

Thank you, Michele. And first and foremost, it's my thanks to the presenters today and all the people that have worked so hard. What you don't see right now behind the screen is literally so many people that have tried to make this go off without a hitch. So my thanks to them. My thanks to the presenters to making this a reality. Obviously, we'd love to be doing this in person, and we look forward to doing it in person but we thought it was important to check in with our shareholders on what we're doing all the exciting things happening with Calian. I also want to thank you, our current investors, for your confidence, and I hope that those who are contemplating investing in Calian that you're excited as I am on the potential of moving the company forward. I want to leave you where I started. Why invest in Calian? I want to reiterate that, from my viewpoint, Calian is one of very few companies that you can have access to a proven track record of profitable growth. We just celebrated actually over 20 years of profitable execution, 80 quarters, that investors can get access to 4 distinct businesses that you saw today, a domestic and global customer base, a pristine balance sheet to invest in organic and M&A growth, over $1 billion in contract backlog, an aggressive growth strategy to bring more innovation in all that we do and looking at new revenue models, as you've heard today and not to mention the convergence opportunities we're seeing between our business units like our health and IT business units in the health care space. And of course, I have to mention we pay dividends. So in short, I'd like to say that Calian, is something I say when people talk to me about Calian, I'd like to say stability through diversity, growth through innovation. I want to thank you again for your time. And if there are any further questions, please don't hesitate to reach out. We're going to conclude the presentation. Thanks for your time. Very much appreciate it. Again, thanks for everyone in this room that you can see right now for the incredible efforts. Have a great day, everyone. We look forward to seeing you soon. Stay safe.

All right. Bye, everyone.

Bye.