Strong MDA Revenues Close Out Q3 as the Company Maintains Guidance for 2022

MDA's satellite and robotics growth continues to fuel growth at the Canadian space company, boosting revenues 55 percent year over year. The company reported Q3 2022 revenues of $172 million on the back of a fast-growing backlog. The firm has $1.4 billion in backlog, 70 percent more than this quarter last year, due to previously disclosed contracts with Globalstar's LEO constellation and Canadarm3's Phase B. Adjusted EBITDA was $38.8 million, up by about 22 percent over 2021. "The majority of our programs are ramping up in line with our expectations," CEO Mike Greenley told investors during a conference call Nov. 11. The company is seeing more satellite constellation adoption, along with mobile communications, which is in line with general industry trends with competitors like SpaceX's Starlink. MDA is also keeping an eye on new rules to deorbit space debris in five years (rather than 25 years) from the Federal Communications Commission, a rule put in place in response to the fast-growing numbers of satellites in orbit. "These developments highlight work underway to safeguard space activities and make them more sustainable as our reliance on space technology increases," Greenley said. MDA also pointed to benefits accruing from increased activity in other areas of space exploration. More signatories to the NASA-led Artemis Accords are bringing more opportunities for the company's work with Gateway, for which MDA is supplying Canadarm3. More generally, Greenley said the more than 2,000 spacecraft launched so far in 2022 (a 30 percent increase from last year) shows significant growth in low Earth orbit that is company may be able to leverage. Greenley's forecast for the company's three main business areas remains strong. In satellites, MDA is focused on "advancing multiple requests for communication satellite solutions", particularly with satellite constellations. The past quarter saw MDA announce two awards from U.S. based customers in this realm, accruing to MDA's goal of adding more customers from the United States. Other contracts of note this past quarter include one with York Space Systems to design and build a Ka-band steerable antenna, and being selected as the prime contractor for Globalstar's LEO constellation. Geointelligence continues to see "robust" customer demand, Greenley said, as the company builds out its CHORUS next-generation satellites that will include C-band, X-band and synthetic aperture radar satellites to build on to Radarsat Constellation and Radarsat 2. The Canadian Surface Combatant project contract is also progressing, with a preliminary design review for the vessels coming up in the near future; MDA is tasked with designing and integrating the ships' electronic warfare systems that use proprietary sensors. Robotics and space operations are also doing well, with recent contracts of note including Canadarm Phase B and two tranches of selling Canadarm interfaces to Axiom Space, a Houston-based company that is running commercial astronaut missions to the International Space Station and that is planning its own independent space station in the coming decade. MDA has hired more than 700 people so far in 2022 – last year it hired 670 – to support the growth of these various business lines, and Greenley emphasized the company is watching supply chain shortages closely for "potential business disruptions" like that of Telesat in 2021. MDA was previously selected to provide a phased array antenna for the constellation. Telesat's Lightspeed constellation has been delayed by at least a year, to 2026, due to issues with supplier Thales Alenia Space. Earlier this year, Telesat also reduced the number of satellites to 198 (from 298) due to growing costs associated with the delay and with inflation. MDA has already removed financial guidance regarding the Telesat contract from its 2022 results as Telesat works to secure financing for its constellation; earlier this month, Telesat said it is hoping for more clarity in December. "We continue to work it as an opportunity in our pipeline, certainly," Greenley said of Lightspeed. MDA will provide more guidance, he said, "as that program continues to advance" and a contract award has been secured, he added. Responding to an analyst question about financing during tougher markets this past quarter, Greenley said MDA has a healthy mix of government and commercial customers with no financing issues, while a handful are raising financing in the moment. "They've got all the money that they would need," Greenley said of the majority of MDA's customer portfolio, adding, "we're very encouraged by what we're seeing across the board." MDA's financial guidance remains on track and the company has both its expected cash flow and a good reserve, he said. The company's 2022 revenue outlook is maintained at $630 million to $650 million (at least 30 percent growth year-over-year), with EBITDA guidance slightly rising to $130 million to $135 million (compared with $120 million to $130 million)