MDA REPORTS FIRST QUARTER 2024 RESULTS
-- Q1 2024 Highlights
-- Record backlog of $3.3 billion at quarter end, up 169% YoY
-- Healthy top line growth with revenues of $209.1 million, up 3.6% YoY
-- Solid profitability with adjusted EBITDA of $42.0 million and
adjusted EBITDA margin of 20.1%
-- Adjusted net income of $18.1 million and adjusted diluted earnings
per share of $0.15
-- Rebranded to MDA Space as we continue to lead in a new area of space
innovation
-- Reaffirmed 2024 full-year financial outlook
BRAMPTON, ON, May 9, 2024 /PRNewswire/ - MDA Space (TSX: MDA), a trusted space mission partner to the rapidly expanding global space industry, today announced its financial results for the first quarter ended March 31, 2024.
"We are off to a solid start in 2024. In Q1, the MDA Space team delivered another quarter of strong performance as we continued to convert our backlog and deliver on our customer commitments," said Mike Greenley, Chief Executive Officer of MDA Space. "We also grew our book of business in Q1 and secured a number of awards including a contract to deliver the fleet of MQ-9B SkyGuardian Remotely Piloted Aircraft Systems for the Canadian Armed Forces. And subsequent to quarter end, we received a $250 million contract extension from the Canadian Space Agency to continue supporting robotics operations on the International Space Station until its planned retirement in 2030."
"Last quarter, we also announced our rebranding to MDA Space, a natural brand evolution that further positions us to lead in a new area of space innovation. In addition, as part of our strategy to commercialize and productize our world-leading technology to meet changing market needs, we unveiled two new product brands. MDA AURORA(TM) is our new software-defined digital satellite product line that positions us to capitalize on the market transition from analog to digital satellite technology, and MDA SKYMAKER(TM) is a full suite of scalable and modular space robotics and services that enables us to offer the world's most flight-proven capabilities to any mission or application in an efficient, adaptable and highly accessible kit."
"We are energized by the momentum we are seeing in our business and end markets. With our backlog at a record level, the MDA Space team is laser focused on execution and delivering another successful year for customers, shareholders and our team."
Q1 2024 HIGHLIGHTS
-- Backlog of $3.3 billion at quarter end continued to build and was up
169% compared to Q1 2023. The increase in backlog is driven by new order
bookings including the $2.1 billion Telesat Lightspeed LEO constellation
award announced in 2023.
-- Revenues of $209.1 million in Q1 2024 were up 3.6% year over year driven
by execution on our backlog and strong contributions from the Robotics &
Space Operations business.
-- Adjusted EBITDA of $42.0 million in Q1 2024 compared to $48.9 million in
Q1 2023, representing a decrease of $6.9 million (or 14.1%) year over
year. Adjusted EBITDA margin of 20.1% in Q1 2024 is consistent with the
Company's full year margin guidance of 19-20% and compares to adjusted
EBITDA margin of 24.2% reported in Q1 2023. The year over year change
was largely in line with the variance in gross margin over the same
period driven by evolving program mix.
-- Q1 adjusted net income was $18.1 million compared with $26.5 million for
Q1 2023, representing a decrease of $8.4 million (or 31.7%) year over
year driven by the aforementioned gross profit variance. Adjusted
diluted earnings per share of $0.15 in Q1 2024 compared to $0.22 in Q1
2023.
-- Operating cash flow was an inflow of $24.7 million in Q1 2024 compared
with $45.8 million in Q1 2023. The year over year decrease in operating
cash flow was primarily driven by higher working capital requirements in
Q1 2024 versus the same period last year.
-- At quarter end, net debt to adjusted EBITDA ratio was 2.6x driven by
investment in our growth initiatives.
2024 FINANCIAL OUTLOOK
As a trusted mission partner and leading global space technology provider, we are leveraging our capabilities and expertise to execute on targeted growth strategies across our end markets and business areas. Our strategic initiatives, which span across our three businesses, include investing in next generation space technology and services, expanding our presence in high growth markets and geographies, scaling and expanding skills, talent and operations to meet current and future market demand and leveraging strategic M&A to complement organic growth. We continue to make good progress against our long term strategic plan.
MDA is well positioned to capitalize on strong customer demand and robust market activity given our diverse and proven technology offerings. Our growth pipeline is significant and underpinned by existing and new programs and our book of business is healthy. We see activities ramping up in line with our expectations, and are encouraged by the team's solid execution.
For fiscal 2024, we reaffirm the previous outlook provided in our Q4 2023 earnings release and continue to expect full year revenues to be $950 - $1,050 million, representing robust growth of approximately 25% at the mid-point of guidance compared to 2023 levels. We expect revenue growth to accelerate in the second half of 2024 as we ramp up work volumes on a number of programs. We continue to expect full year adjusted EBITDA to be $190 - $210 million, representing approximately 19% - 20% adjusted EBITDA margin. We reaffirm our expectations that capital expenditures will be $210 - $230 million in 2024, comprising primarily of growth investments to support CHORUS and the previously outlined growth initiatives across our three business areas.
For Q2 2024, we expect revenues to be $215 - $225 million as we continue to execute on our backlog.
FINANCIAL OVERVIEW
KEY INDICATORS SUMMARY
First quarters ended
(in millions of Canadian dollars, except per share data) March 31, 2024 March 31, 2023
Revenues $
209.1 $
201.9
Gross profit $
57.9 $
67.2
Gross margin 27.7 % 33.3 %
Adjusted EBITDA(1) $
42.0 $
48.9
Adjusted EBITDA margin(1) 20.1 % 24.2 %
Adjusted Net Income(1) $
18.1 $
26.5
Adjusted Diluted EPS(1) $
0.15 $
0.22
As at
(in millions of Canadian dollars, except for ratios) March 31, 2024 December 31, 2023
Backlog $
3,312.2 $
3,097.0
Net debt(1) to Adjusted TTM(2)
EBITDA ratio 2.6x 2.4x
REVENUES BY BUSINESS AREA
First quarters ended
(in millions of Canadian dollars) March 31, March 31,
2024 2023
Geointelligence $
51.5 $
51.3
Robotics & Space Operations 70.6 62.9
Satellite Systems 87.0 87.7
Consolidated revenues $
209.1 $
201.9
Revenues
Consolidated revenues for the first quarter of 2024 were $209.1 million, representing an increase of $7.2 million (or 3.6%) from the first quarter of 2023. The year over year increase in revenues was primarily driven by increased volume from our Robotics and Space Operations business.
By business area, revenues in Geointelligence for the first quarter of 2024 were $51.5 million, which represents an increase of $0.2 million (or 0.4%) from the same period in 2023 reflecting steady work volume on programs. Revenues in Robotics & Space Operations for the first quarter of 2024 were $70.6 million, which represents an increase of $7.7 million (or 12.2%) from the same period in 2023. This year over year increase is primarily driven by the higher volume of work performed on Canadarm3. Revenues in Satellite Systems for the first quarter of 2024 were $87.0 million, which represents a decrease of $0.7 million (or 0.8%) from the same period in 2023 driven by completion of various programs in 2023 offset by ramp up of new programs in 2024.
Gross Profit and Gross Margin
Gross profit reflects our revenues less cost of revenues. Q1 2024 gross profit of $57.9 million represents a $9.3 million (or 13.8%) decrease over Q1 2023. Gross margin in Q1 2024 was 27.7%, which is in line with the Company's expectations and compares to gross margin of 33.3% in Q1 2023. The year over year change in both gross profit and gross margin metrics is driven by evolving program mix and higher depreciation expense as new assets come into service.
__________________________
(1)
As defined in the 'Non-IFRS Financial Measures' section
(2)
TTM: Trailing twelve months
Adjusted EBITDA and Adjusted EBITDA Margin
Adjusted EBITDA for the first quarter of 2024 was $42.0 million compared with $48.9 million for the first quarter of 2023, representing a decrease of $6.9 million (or 14.1%) year over year. Adjusted EBITDA margin of 20.1% for the first quarter of 2024 is consistent with the Company's full year margin guidance of 19-20% and compares to adjusted EBITDA margin of 24.2% reported in the first quarter of 2023. The year over year change was largely in line with the variance in gross margin over the same period driven by evolving program mix.
Adjusted Net Income
Adjusted net income for the first quarter of 2024 was $18.1 million compared with $26.5 million for the first quarter of 2023, representing a decrease of $8.4 million (or 31.7%) year over year driven by the aforementioned gross profit variance.
Backlog
Backlog is comprised of our remaining performance obligations which represent the transaction price of firm orders less inception to date revenue recognized and excludes unexercised contract options and indefinite delivery or indefinite quantity contracts. Backlog as at March 31, 2024 was $3,312.2 million, an increase of $2,079.8 million compared with the backlog at March 31, 2023 driven by new order bookings including the Telesat Lightspeed LEO constellation contract awarded in Q3 2023, partially offset by continued conversion of our backlog into revenue. The following table shows the build up of backlog for Q1 2024 as compared with the same period in 2023.
First quarters
ended
(in millions of Canadian dollars) March 31,
2024 March 31, 2023
Opening Backlog $
3,097.0 $
1,378.2
Less: Revenue recognized (209.1) (201.9)
Add: Order Bookings 424.3 56.1
Ending Backlog $
3,312.2 $
1,232.4
CONFERENCE CALL AND WEBCAST
MDA will host a conference call and webcast to discuss these financial results on Thursday, May 9, 2024 at 8:30 a.m. ET. Interested parties can join the call by dialing 289-819-1350 (Toronto area) or 1-800-836-8184 (toll-free North America) or +44 800-279-7040 (toll-free international) and entering the conference ID 83680. A live webcast of the conference call and an accompanying slide presentation will be available at https://mda-en.investorroom.com/events-presentations.
A replay of the conference will be archived on the MDA website following the call. Parties may also access a recording of the call which will be available until May 16, 2024, by dialing 1-888-660-6345 and entering the passcode 83680 #.
NON-IFRS FINANCIAL MEASURES
This press release refers to certain non-IFRS measures. These measures are not recognized measures under IFRS, do not have a standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of our results of operations from management's perspective. Accordingly, the measures should not be considered in isolation nor as a substitute for analysis of our financial information reported under IFRS. We use non-IFRS measures, including EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income, Adjusted Earnings per Share, Order Bookings and Net Debt, to provide investors with supplemental measures of our operating performance and thus highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS measures. We define EBITDA as net income (loss) before: i) depreciation and amortization expenses, ii) provision for (recovery of) income taxes, and iii) finance costs. Adjusted EBITDA is calculated by adding to and deducting from EBITDA, as applicable, certain expenses, costs, charges or benefits incurred in such period which in management's view are either not indicative of underlying business performance or impact the ability to assess the operating performance of our business, including i) unrealized foreign exchange gain or loss ii) unrealized gain or loss on financial instruments and iii) share-based compensation expenses, and iv) other items that may arise from time to time. Adjusted EBITDA margin represents Adjusted EBITDA divided by revenue. Order Bookings is the dollar sum of contract values of firm customer contracts. Adjusted Net Income is calculated by adding to and deducting from net income, as applicable, certain expenses, costs, charges or benefits incurred in such period which in management's view are either not indicative of underlying business performance or impact the ability to assess the operating performance of our business, including i) amortization of intangible assets related to business combinations, ii) unrealized foreign exchange gain or loss, iii) unrealized gain or loss on financial instruments, and iv) share-based compensation expenses, and iv) other items that may arise from time to time. Adjusted Earnings per Share represents Adjusted Net Income divided by the weighted average number of shares outstanding. Order Bookings is indicative of firm future revenues; however, it does not provide a guarantee of future net income and provides no information about the timing of future revenue. Net Debt is the total carrying amount of long-term debt including current portions, as presented in the Q1 2024 Financial Statements, less cash (or plus bank indebtedness) and excluding any lease liabilities. Net Debt is a liquidity metric used to determine how well the Company can pay all of its debts if they were due immediately.
FORWARD-LOOKING STATEMENTS
This press release may contain forward?looking information within the meaning of applicable securities legislation, which reflects the Company's current expectations regarding future events. Forward?looking information is based on a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond the Company's control, which could cause actual results and events to differ materially from those that are disclosed in or implied by such forward?looking information. Such risks and uncertainties include, but are not limited to the factors discussed under "Risk Factors" in the Company's Annual Information Form (AIF) dated February 28, 2024 and available on SEDAR+ at www.sedarplus.com. MDA does not undertake any obligation to update such forward?looking information, whether as a result of new information, future events or otherwise, except as expressly required by applicable law.
ABOUT MDA SPACE
Building the space between proven and possible, MDA Space (TSX:MDA) is a trusted mission partner to the global space industry. A robotics, satellite systems and geointelligence pioneer with a 55-year+ story of world firsts and more than 450 missions, MDA Space is a global leader in communications satellites, Earth and space observation, and space exploration and infrastructure. The MDA Space team of more than 3,000 space experts in Canada, the US and the UK has the knowledge and know-how to turn an audacious customer vision into an achievable mission - bringing to bear a one-of-a-kind mix of experience, engineering excellence and wide-eyed wonder that's been in our DNA since day one. For those who dream big and push boundaries on the ground and in the stars to change the world for the better, we'll take you there. For more information, visit www.mda.space.
MDA Ltd.
Unaudited Interim Condensed Consolidated Statement of Comprehensive Income
For the three months ended March 31, 2024 and 2023
(In millions of Canadian dollars except per share figures)
Three months ended Three months ended
March 31, 2024 March 31, 2023
Revenue $
209.1 $
201.9
Cost of revenue
Materials, labour and subcontractors (140.7) (128.1)
Depreciation and amortization of assets (10.5) (6.6)
Gross profit 57.9 67.2
Operating expenses
Selling, general and administration (18.9) (16.6)
Research and development, net (9.0) (10.1)
Amortization of intangible assets (12.3) (12.8)
Share-based compensation (2.5) (1.2)
Operating income 15.2 26.5
Other income (expenses)
Unrealized gain (loss) on financial instruments 0.9 (0.5)
Foreign exchange gain 2.3 0.4
Finance income 0.7 0.3
Finance costs (6.1) (2.5)
Other income 6.5
Income before taxes 19.5 24.2
Income tax expense (5.7) (8.1)
Net income 13.8 16.1
Other comprehensive income (loss)
Loss on translation of foreign operations (1.2) (0.2)
Gain (loss) on cash flow hedges 2.6 (1.7)
Remeasurement gain on defined benefit plans 8.3 1.7
Total comprehensive income $
23.5 $
15.9
Earnings per share:
Basic $
0.12 $
0.14
Diluted 0.11 0.13
Weighted-average common shares outstanding:
Basic 119,582,207 119,074,498
Diluted 123,263,439 119,625,038
MDA Ltd.
Unaudited Interim Condensed Consolidated Statement of Financial Position
March 31, 2024
(In millions of Canadian dollars)
As at March 31,
2024 December 31, 2023
Assets
Current assets:
Cash $
29.3 $
22.5
Trade and other receivables 114.3 169.5
Unbilled receivables 264.7 183.1
Inventories 10.1 9.9
Income taxes receivable 59.7 47.3
Other current assets 32.2 24.3
510.3 456.6
Non-current assets:
Property, plant and equipment 394.5 369.1
Right-of-use assets 86.0 71.8
Intangible assets 578.5 582.5
Goodwill 439.8 439.8
Deferred income tax assets 14.4 14.9
Other non-current assets 230.4 227.0
Total assets $
2,253.9 $
2,161.7
Liabilities and shareholders' equity
Current liabilities:
Accounts payable and accrued liabilities $
204.5 $
219.1
Income taxes payable 4.1 4.4
Contract liabilities 120.8 76.9
Current portion of net employee benefit payable 49.9 57.4
Current portion of lease liabilities 12.0 10.9
Other current liabilities 2.9 4.5
394.2 373.2
Non-current liabilities:
Net employee defined benefit payable 22.4 22.8
Lease liabilities 89.7 75.2
Long-term debt 468.6 438.9
Deferred income tax liabilities 182.2 180.8
Other non-current liabilities 4.9 6.1
Total liabilities 1,162.0 1,097.0
Shareholders' equity
Common shares 958.8 956.1
Contributed surplus 32.3 31.3
Accumulated other comprehensive income 28.3 18.6
Retained earnings 72.5 58.7
Total equity 1,091.9 1,064.7
Total liabilities and equity $
2,253.9 $
2,161.7
MDA LTD.
Unaudited Interim Condensed Consolidated Statement of Cash Flows
For the three months ended March 31, 2024 and 2023
(In millions of Canadian dollars)
Three months ended Three months ended
March 31, 2024 March 31, 2023
Cash flows from operating activities
Net income $
13.8 $
16.1
Items not affecting cash:
Income tax expense 5.7 8.1
Depreciation of property, plant and equipment 4.2 2.8
Depreciation of right-of-use assets 3.5 2.0
Amortization of intangible assets 15.1 14.6
Gain o disposal of assets (5.8)
Share-based compensation expense 2.5 1.2
Investment tax credits accrued (8.2) (7.1)
Finance costs, net 5.4 2.2
Unrealized (gain) loss on financial instruments (0.9) 0.5
Changes in operating assets and liabilities (2.9) 9.1
32.4 49.5
Interest paid (8.1) (4.0)
Income tax received 0.4 0.3
Net cash from operating activities 24.7 45.8
Cash flows from investing activities
Purchases of property and equipment (27.0) (29.7)
Purchases/development of intangible assets (13.2) (10.8)
Proceeds from disposal of assets 7.4
Acquisition of subsidiary, net of cash (11.6)
Net cash used in investing activities (44.4) (40.5)
Cash flows from financing activities
Borrowings from senior credit facility 30.0 25.0
Payment of lease liability (principal portion) (3.1) (1.9)
Proceeds from stock options exercised 0.8 0.4
Net cash provided by financing activities 27.7 23.5
Net increase in cash 8.0 28.8
Net foreign exchange differences on cash (1.2) (0.2)
Cash, beginning of period 22.5 39.3
Cash, end of period $
29.3 $
67.9
RECONCILIATION OF NON-IFRS MEASURES
The following tables provide a reconciliation of net income to EBITDA, adjusted EBITDA, and adjusted net income:
First quarters ended
(in millions of Canadian dollars) March 31, 2024 March 31,
2023
Net income $
13.8 $
16.1
Depreciation and amortization 10.5 6.6
Amortization of intangible assets related to business combination 12.3 12.8
Income tax expense 5.7 8.1
Finance income (0.7) (0.3)
Finance costs 6.1 2.5
EBITDA $
47.7 $
45.8
Unrealized foreign exchange (gain) loss (1.5) 1.4
Unrealized (gain) loss on derivative financial instruments (0.9) 0.5
Gain on disposal of assets (5.8)
Share based compensation 2.5 1.2
Adjusted EBITDA $
42.0 $
48.9
Adjusted EBITDA
margin 20.1 % 24.2 %
First quarters ended
(in millions of Canadian dollars) March 31, 2024 March 31, 2023
Net income $
13.8 $
16.1
Amortization of intangible assets related to business combination 12.3 12.8
Gain on disposal of assets (5.8)
Unrealized (gain) loss on derivative financial instruments (0.9) 0.5
Net foreign exchange gain (2.3) (0.4)
Share based compensation 2.5 1.2
Income taxes related to the above items(1) (1.5) (3.7)
Adjusted net income $
18.1 $
26.5
Weighted average number of shares outstanding - diluted 123,263,439 119,562,008
Adjusted earnings per share - diluted 0.15 0.22
(1)
Standard income tax rate of 26.5% applied
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SOURCE MDA Space
