- Strong top line growth with revenues of
$172.0 million in Q3 2022, up 55% YoY - Solid profitability with adjusted EBITDA of
$38.8 million in Q3 2022, up 22% YoY - Robust adjusted EBITDA margin of 22.6% in Q3 2022
- Healthy backlog of
$1.4 billion at quarter end, up 70% YoY - Updated 2022 full-year financial outlook
- Reaffirmed revenue range of
$630-$650 million - Raised adjusted EBITDA range to
$130-$135 million (from$120-$130 million prior) - Narrowed capital expenditures range to
$180-$195 million (from$180-$220 million prior)
"In Q3, focused execution by the MDA team delivered another quarter of strong performance with impressive revenue growth across our businesses and solid profitability. In line with our expectations, we are seeing steady progression in our top and bottom line as we convert our healthy backlog by meeting customer commitments," said
"We also continued to see new customer contracts in line with our growth-focused strategy including multiple awards in Satellite Systems to support US government programs, and a second contract from Axiom Space to deliver commercial products derived from Canadarm3 technology in Robotics and Space Operations. Our opportunity funnel remains strong across all of our businesses, positioning MDA to further capitalize on strong growth in our end markets."
Q3 2022 HIGHLIGHTS
- Q3 revenues of
$172.0 million were up 55% YoY driven by higher revenues across our three business areas with strong contributions from Satellite Systems and Robotics & Space Operations businesses. - Adjusted EBITDA of
$38.8 million in Q3 2022 was up 22% YoY driven by higher volumes across our businesses. - Excluding the impact of the
Canada Emergency Wage Subsidy (CEWS) income received in Q3 2021 which was not repeated in Q3 2022, adjusted EBITDA was$38.8 million in the current quarter, compared to$22.7 million in Q3 2021 (up 71% YoY). Adjusted EBITDA margin was 22.6% in Q3 2022 compared to 20.4% in Q3 2021 reflecting strong execution and operating performance. - Backlog of
$1.4 billion was up 70% YoY driven by sizeable awards in the first half of 2022 including Globalstar's LEO constellation (~$415 million ), and Phase B of Canadarm3 ($269 million ). - Operating cash flow of
$7.0 million in Q3 2022 compared to cash usage of$0.5 million in Q3 2021, the year-over-year increase was driven by higher net income and the timing of working capital requirements in Q3 2022 versus the prior quarter. - Healthy financial position with net debt to adjusted EBITDA ratio of 1.3x at quarter end.
2022 FINANCIAL OUTLOOK
As a leading 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 growing our share of the constellation market and developing digital satellite technologies, maintaining our global leadership in space robotics and exploration mission solutions and leveraging our technologies for emerging commercial opportunities, and expanding our market leadership in Geointelligence through the development of our CHORUS Earth observation constellation. We are making good progress against our long term plan.
Underlying customer demand continues to be strong and market activity remains robust. Our significant growth pipeline is underpinned by existing contract awards of key programs and our book of business remains healthy. We see activities ramping up in line with our expectations on the majority of our programs, and are encouraged by the team's solid execution. We continue to closely monitor developments related to supply chain disruptions, and are taking pro-active measures across our three business areas to mitigate the impact on our operations to the extent possible.
We are reaffirming our 2022 revenue outlook and expect full year revenues to be
FINANCIAL OVERVIEW
KEY INDICATORS SUMMARY
Third Quarters Ended | Nine Months Ended | ||||||||||
(in millions of Canadian dollars, except for ratios) | September | September | September | September | |||||||
Revenues | $ | 172.0 | $ | 111.3 | $ | 455.1 | $ | 361.4 | |||
Gross profit | $ | 56.4 | $ | 39.4 | $ | 169.5 | $ | 122.4 | |||
Gross margin | 32.8 % | 35.4 % | 37.2 % | 33.9 % | |||||||
Adjusted EBITDA(1) | $ | 38.8 | $ | 31.8 | $ | 118.0 | $ | 110.3 | |||
Adjusted EBITDA margin | 22.6 % | 28.6 % | 25.9 % | 30.5 % | |||||||
As at | |||||||||||
(in millions of Canadian dollars, except for ratios) | December 31, 2021 | ||||||||||
Backlog | $ | 1,405.1 | $ | 864.3 | |||||||
Net debt(1) to Adjusted TTM(2)EBITDA ratio | 1.3x | 0.4x | |||||||||
(1) As defined in the 'Non-IFRS Financial Measures' section; (2) TTM: trailing twelve months |
REVENUES BY BUSINESS AREA
Third Quarters Ended | Nine Months Ended | |||||||
(in millions of Canadian dollars) | September | September | September | September | ||||
Geointelligence | $ | 45.5 | $ | 40.7 | $ | 141.4 | $ | 137.9 |
Robotics & Space Operations | 54.6 | 33.1 | 145.8 | 103.0 | ||||
Satellite Systems | 71.9 | 37.5 | 167.9 | 120.5 | ||||
Consolidated revenues | $ | 172.0 | $ | 111.3 | $ | 455.1 | $ | 361.4 |
Revenues
Consolidated revenues for the third quarter of 2022 were
By business area, Q3 2022 revenues in Geointelligence of
For the nine months ended
By business area, consolidated year to date revenues in Geointelligence of
Gross Profit and Gross Margin
Gross profit reflects our revenues less cost of revenues. Q3 2022 gross profit of
For the nine months ended
Adjusted EBITDA and Adjusted EBITDA Margin
Adjusted EBITDA for the third quarter of 2022 was
Excluding the impact of CEWS income contributions, adjusted EBITDA in Q3 2022 of
For the nine months ended
Excluding the impact of the ITCs claims resolution in 2022 and the CEWS income contribution in 2021, adjusted EBITDA improved to
Adjusted EBITDA, excluding CEWS income and historical ITCs claims resolution, is summarized below.
Third Quarters Ended | Nine Months Ended | |||||||
(in millions of Canadian dollars) | September | September | September | September | ||||
Adjusted EBITDA | $ | 38.8 | $ | 31.8 | $ | 118.0 | $ | 110.3 |
CEWS income | — | (9.1) | — | (24.0) | ||||
ITCs claims resolution | — | — | (16.8) | — | ||||
Adjusted EBITDA, excluding CEWS and ITCs claims resolution | $ | 38.8 | $ | 22.7 | $ | 101.2 | $ | 86.3 |
Adjusted EBITDA margin, excluding CEWS and ITCs claims resolution | 22.6 % | 20.4 % | 22.2 % | 23.9 % |
Backlog
Backlog as at
Third Quarters Ended | Nine Months Ended | |||||||
(in millions of Canadian dollars) | September | September | September | September | ||||
Opening Backlog | $ | 1,520.8 | $ | 640.0 | $ | 864.3 | $ | 562.5 |
Less: Revenue recognized | (172.0) | (111.3) | (455.1) | (361.4) | ||||
Add: Order Bookings | 56.3 | 300.2 | 995.9 | 627.8 | ||||
Ending Backlog | $ | 1,405.1 | $ | 828.9 | $ | 1,405.1 | $ | 828.9 |
CONFERENCE CALL AND WEBCAST
MDA will host a conference call and webcast to discuss these financial results on Friday, November 11, 2022 at
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
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, 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. 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 Q3 2022 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
ABOUT MDA
Serving the world from its Canadian home and global offices, MDA (TSX:MDA) is an international space mission partner and a robotics, satellite systems and geointelligence pioneer with a 50-year story of firsts on and above the Earth. With over 2,500 staff across
Unaudited Interim Condensed Consolidated Statement of Operations and Comprehensive Income
For the three and nine months ended
(In millions of Canadian dollars except per share figures)
Three months | Nine months | ||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||
Revenue | $ | 172.0 | $ | 111.3 | $ | 455.1 | $ | 361.4 | |||
Cost of revenue | |||||||||||
Materials, labour and subcontractors | (109.8) | (66.1) | (268.2) | (221.6) | |||||||
Depreciation and amortization of assets | (5.8) | (5.8) | (17.4) | (17.4) | |||||||
Gross profit | 56.4 | 39.4 | 169.5 | 122.4 | |||||||
Operating expenses | |||||||||||
Selling, general and administration | (15.5) | (15.1) | (43.6) | (41.2) | |||||||
Research and development, net | (7.8) | (7.5) | (25.0) | (12.8) | |||||||
Amortization of intangible assets | (12.8) | (13.9) | (39.7) | (42.3) | |||||||
Share-based compensation | (2.5) | (2.3) | (5.5) | (9.6) | |||||||
Operating income | 17.8 | 0.6 | 55.7 | 16.5 | |||||||
Other income (expenses) | |||||||||||
Government grant income | — | 9.1 | — | 24.0 | |||||||
Unrealized gain (loss) on financial instruments | 0.3 | 1.5 | (9.1) | 1.3 | |||||||
Foreign exchange gain (loss) | 5.6 | 2.9 | 5.5 | (2.0) | |||||||
Finance costs | (2.4) | (5.7) | (31.4) | (30.0) | |||||||
Other | — | — | — | 0.9 | |||||||
Income before income taxes | 21.3 | 8.4 | 20.7 | 10.7 | |||||||
Income tax expense | (3.4) | (4.4) | (3.2) | (8.4) | |||||||
Net income | 17.9 | 4.0 | 17.5 | 2.3 | |||||||
Other comprehensive income | |||||||||||
Gain on translation of foreign operations | 0.5 | 0.1 | 1.0 | 1.1 | |||||||
Remeasurement gain (loss) on defined benefit plans | (1.2) | — | 16.6 | — | |||||||
Total comprehensive income | $ | 17.2 | $ | 4.1 | $ | 35.1 | $ | 3.4 | |||
Earnings per share: | |||||||||||
Basic | $ | 0.15 | $ | 0.03 | $ | 0.15 | $ | 0.02 | |||
Diluted | 0.15 | 0.03 | 0.14 | 0.02 | |||||||
Weighted-average common shares outstanding: | |||||||||||
Basic | 118,942,451 | 118,691,628 | 118,776,154 | 106,137,609 | |||||||
Diluted | 122,528,404 | 128,492,429 | 122,085,504 | 113,578,887 | |||||||
Unaudited Interim Condensed Consolidated Statement of Financial Position
(In millions of Canadian dollars)
As at | |||||||
Assets | |||||||
Current assets: | |||||||
Cash and equivalents | $ | — | $ | 83.6 | |||
Trade and other receivables | 151.4 | 92.6 | |||||
Unbilled receivables | 120.8 | 83.7 | |||||
Inventories | 7.6 | 8.0 | |||||
Income taxes receivable | 20.3 | 13.1 | |||||
Other current assets | 19.4 | 12.8 | |||||
319.5 | 293.8 | ||||||
Non-current assets: | |||||||
Property, plant and equipment | 200.7 | 109.9 | |||||
Right-of-use assets | 9.0 | 14.8 | |||||
Intangible assets | 557.9 | 571.2 | |||||
419.9 | 419.9 | ||||||
Deferred income tax assets | 21.6 | 19.3 | |||||
Other non-current assets | 143.8 | 105.7 | |||||
Total assets | $ | 1,672.4 | $ | 1,534.6 | |||
Liabilities and shareholders' equity | |||||||
Current liabilities: | |||||||
Bank indebtedness | $ | 1.1 | $ | — | |||
Accounts payable and accrued liabilities | 110.2 | 71.3 | |||||
Income taxes payable | 12.4 | 11.8 | |||||
Contract liabilities | 118.3 | 91.5 | |||||
Current portion of net employee benefit payable | 40.0 | 38.8 | |||||
Current portion of lease liabilities | 7.7 | 7.9 | |||||
Other current liabilities | 3.3 | 4.6 | |||||
293.0 | 225.9 | ||||||
Non-current liabilities: | |||||||
Net employee defined benefit payable | 22.7 | 33.8 | |||||
Lease liabilities | 2.5 | 7.8 | |||||
Long-term debt | 193.5 | 144.7 | |||||
Deferred income tax liabilities | 158.0 | 158.4 | |||||
Other non-current liabilities | 2.0 | 2.3 | |||||
Total liabilities | 671.7 | 572.9 | |||||
Shareholders' equity | |||||||
Common shares | 951.5 | 950.7 | |||||
Contributed surplus | 22.0 | 16.9 | |||||
Accumulated other comprehensive income | 26.1 | 8.5 | |||||
Retained earnings (deficit) | 1.1 | (14.4) | |||||
Total equity | 1,000.7 | 961.7 | |||||
Total liabilities and equity | $ | 1,672.4 | $ | 1,534.6 | |||
Unaudited Interim Condensed Consolidated Statement of Cash Flows
For the three and nine months ended
(In millions of Canadian dollars)
Three months | Nine months | |||||||||
2022 | 2021 | 2022 | 2021 | |||||||
Cash flows from operating activities | ||||||||||
Net income | $ | 17.9 | $ | 4.0 | $ | 17.5 | $ | 2.3 | ||
Items not affecting cash: | ||||||||||
Income tax expense | 3.4 | 4.4 | 3.2 | 8.4 | ||||||
Depreciation of property, plant and equipment | 2.3 | 2.3 | 7.2 | 6.1 | ||||||
Depreciation of right-of-use assets | 2.1 | 2.2 | 6.2 | 7.9 | ||||||
Amortization of intangible assets | 14.2 | 15.2 | 43.7 | 45.7 | ||||||
Share-based compensation expense | 2.5 | 2.3 | 5.5 | 9.6 | ||||||
Investment tax credits accrued during the period | (10.7) | (4.1) | (42.3) | (13.3) | ||||||
Finance costs | 2.4 | 5.7 | 31.4 | 30.0 | ||||||
(0.3) | (1.5) | 9.1 | (1.3) | |||||||
Changes in operating assets and liabilities | (21.9) | (30.3) | (47.9) | (48.8) | ||||||
Interest paid | (2.9) | (1.1) | (13.9) | (15.5) | ||||||
Income tax received (paid) | (2.0) | 0.4 | (3.0) | 0.3 | ||||||
Net cash from (used in) operating activities | 7.0 | (0.5) | 16.7 | 31.4 | ||||||
Cash flows from investing activities | ||||||||||
Purchases of property and equipment | (32.9) | (25.7) | (100.6) | (30.2) | ||||||
Purchase/development of intangible assets | (8.0) | (4.6) | (32.4) | (27.4) | ||||||
Proceeds from disposal of assets | — | 2.0 | — | 2.0 | ||||||
Net cash used in investing activities | (40.9) | (28.3) | (133.0) | (55.6) | ||||||
Cash flows from financing activities | ||||||||||
Repayment of second lien notes | — | — | (150.0) | (424.1) | ||||||
Borrowings from senior credit facility | 25.0 | — | 195.0 | — | ||||||
Transaction costs incurred on debt refinancing | — | — | (8.9) | — | ||||||
Payment of lease liability (principal portion) | (1.9) | (2.2) | (5.9) | (6.0) | ||||||
Proceeds from stock options exercised | 0.4 | — | 0.4 | — | ||||||
Proceeds from issuance of shares, net of costs | — | — | — | 462.6 | ||||||
Net cash provided by (used in) financing activities | 23.5 | (2.2) | 30.6 | 32.5 | ||||||
Net increase (decrease) in cash and cash equivalents | (10.4) | (31.0) | (85.7) | 8.3 | ||||||
Net foreign exchange differences on cash | 0.5 | 0.1 | 1.0 | 1.1 | ||||||
Cash and cash equivalents, beginning of period | 8.8 | 118.9 | 83.6 | 78.6 | ||||||
Cash and cash equivalents (bank indebtedness), end of period | $ | (1.1) | $ | 88.0 | $ | (1.1) | $ | 88.0 | ||
RECONCILIATON OF NON-IFRS MEASURES
The following table provides a reconciliation of net loss to EBITDA and adjusted EBITDA:
Third Quarters Ended | Nine Months Ended | ||||||||
(in millions of Canadian dollars) | September | September | September | September | |||||
Net income | $ | 17.9 | $ | 4.0 | $ | 17.5 | $ | 2.3 | |
Depreciation and amortization | 5.8 | 5.8 | 17.4 | 17.4 | |||||
Amortization of intangible assets | 12.8 | 13.9 | 39.7 | 42.3 | |||||
Income tax expense | 3.4 | 4.4 | 3.2 | 8.4 | |||||
Finance costs | 2.4 | 5.7 | 31.4 | 30.0 | |||||
EBITDA | $ | 42.3 | $ | 33.8 | $ | 109.2 | $ | 100.4 | |
Unrealized foreign exchange loss (gain) | (5.7) | (2.8) | (5.8) | 2.5 | |||||
Unrealized loss (gain) on financial instruments | (0.3) | (1.5) | 9.1 | (1.3) | |||||
Restructuring provision reversal | — | — | — | (0.9) | |||||
Share based compensation | 2.5 | 2.3 | 5.5 | 9.6 | |||||
Adjusted EBITDA | $ | 38.8 | $ | 31.8 | $ | 118.0 | $ | 110.3 | |
SOURCE
© Canada Newswire, source