• 
  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)
  

BRAMPTON, ON


,


Nov. 11, 2022


/CNW/ – MDA Ltd. (TSX: MDA), a leading provider of advanced technology and services to the rapidly expanding global space industry, today announced its financial results for the third quarter ended

September 30, 2022

.

“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

Mike Greenley

, Chief Executive Officer of MDA.

“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

$630

–

$650 million

, representing robust year over year growth of approximately 30% – 35%. We are raising our 2022 adjusted EBITDA guidance to

$130

–

$135 million

from

$120

–

$130 million

previously to reflect continued strong execution and operating performance. The adjusted EBITDA forecast excludes the

$16.8 million

amount reported in Q1 2022 related to the resolution of historical ITC claims. We are narrowing our 2022 capital expenditures range to

$180

–

$195 million

, down from the prior guidance of

$180

–

$220 million

, primarily comprising of growth investments to support CHORUS and the previously outlined growth initiatives across our three business areas.

FINANCIAL OVERVIEW

KEY INDICATORS SUMMARY

REVENUES BY BUSINESS AREA

Revenues

Consolidated revenues for the third quarter of 2022 were

$172.0 million

, representing an increase of

$60.7 million

(or 54.5%) compared to the third quarter of 2021. The year over year increase in revenues was driven by higher revenues across our three business areas with strong contributions from our Satellite Systems and Robotics & Space Operations businesses.

By business area, Q3 2022 revenues in Geointelligence of

$45.5 million

represents an increase of

$4.8 million

(or 11.8%) compared to Q3 2021 driven by higher volumes in our EO business and modest ramp up in the CSC program. Revenues in Robotics & Space Operations of

$54.6 million

in Q3 2022 represents a

$21.5 million

(or 65.0%) increase year over year, primarily driven by the higher volume of work performed on the Canadarm3 program. Revenues in Satellite Systems of

$71.9 million

in the latest quarter were

$34.4 million

(or 91.7%) higher compared to the same quarter in 2021. The revenue increase was driven by higher levels of activity as new programs ramp up including the Globalstar program which was awarded in Q1 2022.

For the nine months ended

September 30, 2022

, consolidated revenues were

$455.1 million

which were

$93.7 million

(or 25.9%) higher than the same period in 2021. The increase in revenues was primarily driven by execution on our opening backlog as well as orders added to backlog in 2022, primarily in our Satellite Systems and Robotics & Space Operations businesses.

By business area, consolidated year to date revenues in Geointelligence of

$141.4 million

were largely in line with revenues of

$137.9 million

over the same period in 2021. Year to date revenues in Robotics & Space Operations of

$145.8 million

in Q3 2022 represents a

$42.8 million

(or 41.6%) increase year over year, largely driven by the ramp up of work performed on the Canadarm3 program since the beginning of 2022. Year to date revenues in Satellite Systems of

$167.9 million

was

$47.4 million

(or 39.3%) higher compared to the same period in 2021 driven by higher volumes on new programs including the Globalstar program.

Gross Profit and Gross Margin

Gross profit reflects our revenues less cost of revenues. Q3 2022 gross profit of

$56.4 million

represents a

$17.0 million

(or 43.1%) increase over 2021, primarily driven by higher volume of work performed year over year. Gross margin in Q3 2022 was 32.8% compared to 35.4% for the same period in 2021 as a result of the Company’s evolving program mix.

For the nine months ended

September 30, 2022

, gross profit of

$169.5 million

represents a

$47.1 million

(or 38.5%) increase over 2021. The increase is driven by higher work volume year over year coupled with higher Investment Tax Credits (ITCs) income recognized which contributed

$29.0 million

of the increase. Of the higher ITC income recognized in 2022,

$16.8 million

relates to a resolution of historical claims which were recognized in Q1 2022. These ITCs originated from prior years but were not recognized previously due to the uncertainty around the eligibility of the related costs. Year to date gross margin of 37.2% represents a 338 bps improvement compared to 2021. The improvement is largely driven by the aforementioned

$16.8 million

resolution of historical ITC claims. Excluding the impact of these ITCs, year to date gross margin was 33.6% in 2022, largely in line with year to date gross margin of 33.9% in 2021.

Adjusted EBITDA and Adjusted EBITDA Margin

Adjusted EBITDA for the third quarter of 2022 was

$38.8 million

compared to

$31.8 million

in Q3 2021, representing an increase of

$7.0 million

(or 22.0%) year over year. Adjusted EBITDA margin was 22.6% in Q3 2022 compared to 28.6% in Q3 2021. The decrease in adjusted EBITDA margin is primarily attributable to the elimination of government grant income related to

Canada

Emergency Wage Subsidy (CEWS) in 2022. In the third quarter of 2022, no CEWS amount was recognized compared to

$9.1 million

which was recognized in Q3 2021.

Excluding the impact of CEWS income contributions, adjusted EBITDA in Q3 2022 of

$38.8 million

represents an increase of

$16.1 million

(or 70.9%) compared to Q3 2021, which is largely attributable to higher work volume year over year. Adjusted EBITDA margin was 22.6% in Q3 2022 compared to 20.4% in Q3 2021, reflecting strong execution and operating performance.

For the nine months ended

September 30, 2022

, adjusted EBITDA was

$118.0 million

which was

$7.7 million

(or 7.0%) higher than the same period in 2021. The year to date adjusted EBITDA in 2022 included

$16.8 million

of ITC income from the aforementioned resolution of historical claims, while the year to date adjusted EBITDA in 2021 included

$24.0 million

of CEWS income.

Excluding the impact of the ITCs claims resolution in 2022 and the CEWS income contribution in 2021, adjusted EBITDA improved to

$101.2 million

in 2022 from

$86.3 million

in 2021. The increase of

$14.9 million

is primarily the net effect of an improvement in gross profit of

$30.3 million

(exclusive of the impact of the historical claims resolution in Q1 2022) offset by increased R&D expenses of

$12.2 million

and increased SG&A expenses of

$2.4 million

. Year to date adjusted EBITDA margin was 22.2% in 2022 compared to 23.9% in 2021, largely driven by increased R&D activity year over year as the Company ramps up investment in the aforementioned growth initiatives.

Adjusted EBITDA, excluding CEWS income and historical ITCs claims resolution, is summarized below.

Backlog

Backlog as at

September 30, 2022

was

$1,405.1 million

, an increase of

$540.8 million

compared to the backlog at

December 31, 2021

. The following table shows the build up of backlog for Q3 and the nine months ended

September 30, 2022

as compared to the same periods in 2021.

CONFERENCE CALL AND WEBCAST

MDA will host a conference call and webcast to discuss these financial results on

Friday, November 11

, 2022 at

8:30 a.m. ET

. Interested parties can join the call by dialing 416-764-8609 (

Toronto

area) or 1-888-390-0605 (toll-free

North America

) or 080-0652-2435 (toll-free international) and entering the conference ID

32608446

. 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

November 18, 2022

, by dialing 1-888-390-0541 and entering the passcode 608446 #.

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

March 17, 2022

and available on SEDAR at

www.sedar.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

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

Canada

, the US and the UK, MDA is a leading partner in the pursuit of viable Moon colonies, enhanced Earth observation, communication in a hyper-connected world, and more. MDA has a track record of making space ambitions come true, and enables highly skilled people to continually push boundaries, tackle big challenges, and imagine solutions that inspire and endure to change the world for the better, on the ground and in the stars. For more information about the Company, please visit

www.mda.space

.

MDA Ltd.


Unaudited Interim Condensed Consolidated Statement of Operations and Comprehensive Income

For the three and nine months ended

September 30, 2022

and 2021

(In millions of Canadian dollars except per share figures)

MDA Ltd.


Unaudited Interim Condensed Consolidated Statement of Financial Position


September 30, 2022


(In millions of Canadian dollars)

MDA Ltd.


Unaudited Interim Condensed Consolidated Statement of Cash Flows

For the three and nine months ended

September 30, 2022

and 2021

(In millions of Canadian dollars)

RECONCILIATON OF NON-IFRS MEASURES

The following table provides a reconciliation of net loss to EBITDA and adjusted EBITDA:

SOURCE MDA Inc.

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