MDA finished off its 2023 on a strong fiscal note and expects to see continual growth for at least the next few years, the company announced in its quarterly and annual results (Feb. 28).
“We are in the early innings of a multi-decade growth cycle playing out in our end markets and MDA is uniquely qualified to take advantage of the growth with broad market as our backdrop,” CEO Mike Greenley told investors during a conference call Wednesday (Feb. 28).
Both civil and defence spending in government space is at a high, for applications ranging from communications to surveillance; an example in Canada is the announcement this fall of a new RADARSAT+ program that aims to extend MDA’s current satellites in orbit and to add another satellite in the medium term.
The government of Canada also continues to spend money on long-term projects relating to both the Artemis Moon program and MDA’s associated projects, most especially Canadarm3 for NASA’s Gateway space station. MDA also is competing on securing the lunar utility vehicle contract announced in last year’s federal budget, and continuing to work on the Canadian Surface Combatant program that will see MDA design and integrate an electronic warfare system for military vessels.
“These commitments signal not only the speed of the market opportunity before us, but the growing importance of the space economy on a national level,” Greenley said, but noted that it’s not only in Canada. NASA and the U.S. Department of Defense, for example, also are looking to spend big on items like Artemis, satellites and systems to monitor cislunar space.
Civil space activity is also at a high, with highlights Greenley noted including 223 orbital launch attempts in 2023 (up 20 percent from 2020). Most of these are targeting low Earth orbit, where MDA aims to build up its satellite capabilities in the next half-decade as well.
MDA’s contributions include being prime satellite manufacturer on the delayed Telesat Lightspeed program, which may send the first satellites aloft in 2026, and prime contractor for Globalstar’s low Earth orbit constellation. Commercial activity applications in LEO more generally include space-based networks for broadband communication, for direct-to-device communication and for the Internet of things, Greenley added in response to an analyst question about opportunities in that area.
Lightspeed continues to progress towards its newer target, with MDA “currently focused on finalizing supplier selection for the program,” Greenley said. The company has been working with its potential suppliers in the meantime to advance design work, systems requirement analysis, and other planning activities.
Major announcements in the quarter included SpaceX being selected to launch CHORUS (the next-generation Earth observation constellation); securing an interim $180 million for a new, non-geostationary orbit satellite with a full contract expected this year; and the US $40 million acquisition of digital payload entity SatixFy Space Systems UK Ltd., which is expected to deliver new digital satellite communications products for MDA.
The company’s revenues of $205 million, up more than 10 percent year-over-year, were driven by “strong contributions from robotics and space operations and satellite systems businesses,” MDA officials said in their earning statement. Among these contributions were sales of Canadarm3 hardware for future space robotics programs.
Commercialization of Canadarm3, alongside developing CHORUS and new satellite manufacturing capabilities, are strategic directions MDA is spending money on in the hopes of future revenue opportunities from these projects.
Adjusted EBITDA of $42 million, up more than five percent year-over-year, was boosted by backlog work while the adjusted net income of $27.8 million, up nearly 25 percent, came in large part due to ” lower income tax expense and finance costs,” the company added. Adjusted diluted earnings per share were 23 cents in Q4 2023, up from 18 cents in Q4 2022.
Operating cash flow also rose slightly, to $41.2 million over $40.3 million in the fourth quarter of last year. Growth here was moderated by capital spends, such as $28.9 million for vendor deposits to prepare for the CHORUS constellation launch in Q4 2025.
“We continue to engage in active discussions with both new and existing customers on how CHORUS can help address the Earth observation data and analytics needs, and are pleased with the response from customers thus far,” Greenley noted of the program.
MDA’s backlog stands at $3.1 billion at the end of fiscal year 2023, up 125 percent from last year. On the staffing side, MDA said it has hired 890 new staff globally in the past year for a current total of 3,000 personnel. It plans to double its United Kingdom workforce in the coming year; the global headquarters in Brampton, Ont. will shift locations to a nearby new facility that will include a new space robotics centre of excellence, as MDA previously announced.
The company expects its full year revenues in 2024 to be between $950 million to $1.05 billion, particularly in the second half of the year as “we ramp up work volume on a number of programs.” CHORUS and other growth projects will fuel about $210 million to $230 million in capital expenditures, and full year adjusted EBITDA will be between $190 million and $210 million.