- 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.
"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 SKYMAKERTM 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."
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 EBITDA1 | $ | 42.0 | $ | 48.9 | ||||||
Adjusted EBITDA margin1 | 20.1 % | 24.2 % | ||||||||
Adjusted Net Income1 | $ | 18.1 | $ | 26.5 | ||||||
Adjusted Diluted EPS1 | $ | 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 debt1 to Adjusted TTM2 EBITDA ratio | 2.6x | 2.4x | ||||||||
REVENUES BY BUSINESS AREA
First quarters ended | ||||||||
(in millions of Canadian dollars) | March 31, 2024 | March 31, 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 | ||||
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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.
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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 items1 | (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 | ||||||||
SOURCE MDA Space
