- Strong top line growth with revenues of $201.9 million in Q1 2023, up 57% YoY
- Solid profitability with adjusted EBITDA (excluding
non-recurring items) of $48.9 million
in Q1 2023, up 77% YoY
- Robust adjusted EBITDA margin of 24.2% in Q1 2023
- Strong operating cash flow of $46
million in Q1 2023, up 212% YoY
- Healthy backlog of $1.2
billion at quarter end
- Reaffirmed 2023 full-year financial outlook
BRAMPTON, ON, May 12, 2023
/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 first
quarter ended March 31, 2023.
"We are off to a solid start in 2023. In Q1, the MDA team
delivered another quarter of strong performance demonstrating
impressive revenue and EBITDA growth as we convert our backlog and
meet customer commitments," said Mike
Greenley, Chief Executive Officer of MDA. "With our backlog
at a healthy level following a strong year of contract awards in
2022, our team is laser focused on execution. We continue to see
healthy market demand and interest in space technology with both
government and commercial customers increasingly recognizing and
funding civil and defence programs. We were particularly pleased to
see the Government of Canada
recently commit to $2.5 billion in
new space spending and look forward to working with the Canadian
Space Agency and other organizations to realize these new
missions."
Q1 2023 HIGHLIGHTS
- Q1 revenues of $201.9 million
were up 57% YoY driven by higher revenues across our three business
areas with strong contributions from Satellite Systems and Robotics
& Space Operations businesses.
- Adjusted EBITDA of $48.9 million
in Q1 2023 was up 10% YoY driven by higher volumes of work across
our businesses.
-
- Excluding the impact of historical Investment Tax Credit (ITC)
claims of $16.8 million recognized in
Q1 2022, adjusted EBITDA was $48.9
million in the latest quarter compared to $27.7 million in Q1 2022 representing a 77% YoY
increase driven by higher work volumes.
- Adjusted EBITDA margin, excluding the previously mentioned ITC
claims, was 24.2% in Q1 2023 compared to 21.6% in Q1 2022. The YoY
margin improvement reflects disciplined SG&A cost control.
- Backlog of $1.2 billion at
quarter end was at a healthy level following a year of strong
contract awards in 2022.
- Operating cash flow of $45.8
million in Q1 2023 compared to $14.7
million in Q1 2022, the 212% YoY increase was driven by
higher net income and positive working capital contributions in Q1
2023 versus the same period last year.
- Healthy financial position with net debt to adjusted EBITDA
ratio of 1.2x at quarter end.
2023 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
expanding our share of the growing constellation market, leveraging
our leading robotics technology platform to capitalize on emerging
commercial opportunities, and further strengthening our positioning
in Geointelligence through the development of our CHORUS Earth
observation constellation. 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 contract awards of key 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. 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.
For fiscal 2023, we reaffirm the previous outlook provided in
our Q4 2022 earnings release and continue to expect full year
revenues to be $750 – $800 million, representing robust year over year
growth of approximately 20% at the mid-point of guidance. We
continue to expect full year adjusted EBITDA to be $145 – $155
million, representing approximately 19% – 20% adjusted
EBITDA margin. We reaffirm our expectations that capital
expenditures will be $220 –
$240 million in 2023, primarily
comprising of growth investments to support CHORUS and the
previously outlined growth initiatives across our three business
areas. We expect Q2 2023 revenues to grow by approximately 25%
compared to Q2 2022 levels as we continue to execute on our
backlog.
FINANCIAL OVERVIEW
KEY INDICATORS SUMMARY
|
First quarters
ended
|
(in millions of
Canadian dollars)
|
March 31,
2023
|
March 31,
2022
|
Revenues
|
|
|
$
|
201.9
|
|
|
$
|
128.4
|
Gross profit
|
|
|
$
|
67.2
|
|
|
$
|
61.7
|
Gross margin
|
|
33.3 %
|
|
48.1 %
|
Adjusted
EBITDA1
|
|
|
$
|
48.9
|
|
|
$
|
44.5
|
Adjusted EBITDA
margin1
|
|
|
|
24.2 %
|
|
|
|
34.7 %
|
|
As at
|
(in millions of
Canadian dollars, except for ratios)
|
March 31,
2023
|
December 31,
2022
|
Backlog
|
$
|
1,232.4
|
$
|
1,378.2
|
Net debt1 to
Adjusted TTM2 EBITDA
ratio
|
|
1.2x
|
|
1.3x
|
____________________________
|
1 As
defined in the 'Non-IFRS Financial Measures' section
|
2 TTM: Trailing twelve
months
|
|
REVENUES BY BUSINESS AREA
|
First quarters
ended
|
(in millions of
Canadian dollars, except for ratios)
|
March 31,
2023
|
March 31,
2022
|
Geointelligence
|
|
|
$
|
51.3
|
|
|
$
|
48.9
|
Robotics & Space
Operations
|
|
|
|
62.9
|
|
|
|
42.4
|
Satellite
Systems
|
|
|
|
87.7
|
|
|
|
37.1
|
Consolidated
revenues
|
|
|
$
|
201.9
|
|
|
$
|
128.4
|
Revenues
Consolidated revenues for the first quarter of 2023 were
$201.9 million, representing an
increase of $73.5 million (or 57.2%)
compared to the first quarter of 2022. The year over year increase
in revenues was primarily driven by strong contributions from our
Satellite Systems and Robotics & Space Operations
businesses.
By business area, Q1 2023 revenues in Geointelligence of
$51.3 million represents an increase
of $2.4 million (or 4.9%) compared to
Q1 2022, reflecting slightly higher volume of work related to the
CSC program. Revenues in Robotics & Space Operations of
$62.9 million in Q1 2023 represents a
$20.5 million (or 48.3%) increase
year over year, primarily driven by the higher volume of work
performed on the Canadarm3 program. Revenues in Satellite Systems
of $87.7 million in the latest
quarter were $50.6 million (or
136.4%) higher compared to the same quarter in 2022. The revenue
increase was driven by higher levels of activity on a number of
programs including the Globalstar program which was awarded in Q1
2022.
Gross Profit and Gross Margin
Gross profit reflects our revenues less cost of revenues. Q1
2023 gross profit of $67.2 million
represents a $5.5 million (or 8.9%)
increase over Q1 2022, primarily driven by higher volume of work
performed year over year, largely offset by $16.8 million of higher ITCs recorded in Q1 2022
related to the resolution of historical claims. Excluding the
impact of the historical ITC claims recognized in Q1 2022, gross
profit increased by 49.7%. Gross margin in Q1 2023 was 33.3%, which
is in line with our expectations as the Company's program mix
evolves. Comparatively, gross margin in Q1 2022 was 48.1%, or 35.0%
excluding the aforementioned impact of the historical ITC claims
recognized in Q1 2022.
Adjusted EBITDA and Adjusted EBITDA Margin
Adjusted EBITDA for the first quarter of 2023 was $48.9 million compared to $44.5 million in Q1 2022, representing an
increase of $4.4 million (or 9.9%)
year over year primarily driven by higher gross profit as we
continue to execute on our backlog. Q1 2022 adjusted EBITDA
included $16.8 million of ITC income
from the aforementioned resolution of historical ITC claims. When
excluding the impact of the $16.8
million historical ITC claims, adjusted EBITDA in the latest
quarter was $48.9 million compared to
$27.7 million in Q1 2022,
representing an increase of $21.2
million (or 76.5%) year over year. The $21.2 million improvement is primarily driven by
the net effect of an improvement in gross profit of $22.3 million (exclusive of the impact of the
historical claims resolution in Q1 2022).
Adjusted EBITDA margin was 24.2% in Q1 2023 compared to 34.7% in
Q1 2022. Adjusted EBITDA margin excluding the previously noted
historical ITC claims resolution was 24.2% in Q1 2023 compared to
21.6% in the prior quarter reflecting disciplined SG&A cost
control.
Adjusted EBITDA, excluding historical ITCs claims resolution, is
summarized below.
|
|
First quarters
ended
|
(in millions of
Canadian dollars)
|
March 31,
2023
|
March 31,
2022
|
Adjusted
EBITDA
|
|
|
$
|
48.9
|
|
|
$
|
44.5
|
ITCs claims
resolution
|
|
|
|
—
|
|
|
|
(16.8)
|
Adjusted EBITDA,
excluding ITCs claims resolution
|
|
|
$
|
48.9
|
|
|
$
|
27.7
|
Adjusted EBITDA margin,
excluding ITCs claims resolution
|
|
24.2 %
|
|
21.6 %
|
Backlog
Backlog as at March 31, 2023 was
$1,232.4 million, a decrease of
$284.4 million compared to the
backlog at March 31, 2022 driven by
continued conversion of backlog into revenue and the booking of two
sizeable awards in Q1 2022 (Globalstar and Canadarm3). The
following table shows the build up of backlog for Q1 2023 as
compared to the same period in 2022.
|
|
First quarters
ended
|
(in millions of
Canadian dollars)
|
March 31,
2023
|
March 31,
2022
|
Opening
Backlog
|
|
|
$
|
1,378.2
|
|
|
$
|
864.3
|
Less: Revenue
recognized
|
|
|
|
(201.9)
|
|
|
|
(128.4)
|
Add: Order
Bookings
|
|
|
|
56.1
|
|
|
|
780.9
|
Ending
Backlog
|
|
|
$
|
1,232.4
|
|
|
$
|
1,516.8
|
CONFERENCE CALL AND WEBCAST
MDA will host a conference call and webcast to discuss these
financial results on Friday, May 12,
2023 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
97252249. 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 19,
2023, by dialing 1-888-390-0541 and entering the passcode
252249 #.
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 Q1 2023 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 23, 2023 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 2,700 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 Comprehensive
Income
For the three months ended March 31,
2023 and 2022
(In millions of Canadian dollars except per share
figures)
|
|
Three months
ended
|
Three months
ended
|
|
|
March 31,
2023
|
March 31,
2022
|
|
|
|
|
|
|
Revenue
|
|
$
|
201.9
|
$
|
128.4
|
|
|
|
|
|
|
Cost of
revenue
|
|
|
|
|
|
Materials, labour and
subcontractors
|
|
|
(128.1)
|
|
(60.9)
|
Depreciation and
amortization of assets
|
|
|
(6.6)
|
|
(5.8)
|
Gross
profit
|
|
|
67.2
|
|
61.7
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
Selling, general and
administration
|
|
|
(16.6)
|
|
(14.3)
|
Research and
development, net
|
|
|
(10.1)
|
|
(8.5)
|
Amortization of
intangible assets
|
|
|
(12.8)
|
|
(14.0)
|
Share-based
compensation
|
|
|
(1.2)
|
|
(1.6)
|
Operating
income
|
|
|
26.5
|
|
23.3
|
|
|
|
|
|
|
Other income
(expenses)
|
|
|
|
|
|
Unrealized loss on
financial instruments
|
|
|
(0.5)
|
|
(5.3)
|
Foreign exchange gain
(loss)
|
|
|
0.4
|
|
(2.2)
|
Finance
costs
|
|
|
(2.2)
|
|
(4.3)
|
Income before taxes
|
|
24.2
|
|
11.5
|
|
|
|
|
|
|
Income tax
expense
|
|
|
(8.1)
|
|
(3.1)
|
Net
income
|
|
|
16.1
|
|
8.4
|
|
|
|
|
|
|
Other comprehensive
income (loss)
|
|
|
|
|
Gain (loss) on
translation of foreign operations
|
|
(0.2)
|
|
0.4
|
Loss on cash flow
hedges
|
|
(1.7)
|
|
—
|
Remeasurement gain on
defined benefit plans
|
|
|
1.7
|
|
—
|
Total comprehensive income
|
$
|
15.9
|
$
|
8.8
|
|
|
|
|
|
|
Earnings per
share:
|
|
|
|
|
|
Basic
|
|
$
|
0.14
|
$
|
0.07
|
Diluted
|
|
|
0.13
|
|
0.07
|
|
|
|
|
|
|
Weighted-average
common shares outstanding:
|
|
|
|
Basic
|
|
119,074,498
|
118,691,628
|
Diluted
|
|
119,625,038
|
124,153,386
|
|
|
|
|
|
|
|
MDA Ltd.
Unaudited Interim Condensed Consolidated Statement of Financial
Position
March 31, 2023
(In millions of Canadian dollars)
As at
|
|
March 31,
2023
|
December 31,
2022
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
Cash
|
|
|
$
|
67.9
|
|
$
|
39.3
|
Trade and other
receivables
|
|
|
|
160.9
|
|
|
155.5
|
Unbilled
receivables
|
|
|
|
117.6
|
|
|
121.0
|
Inventories
|
|
|
|
7.6
|
|
|
7.5
|
Income taxes
receivable
|
|
|
|
22.6
|
|
|
35.1
|
Other current
assets
|
|
|
|
19.2
|
|
|
19.8
|
|
|
|
|
395.8
|
|
|
378.2
|
Non-current
assets:
|
|
|
|
|
|
|
|
Property, plant and
equipment
|
|
|
|
262.0
|
|
|
235.1
|
Right-of-use
assets
|
|
|
|
5.2
|
|
|
7.1
|
Intangible
assets
|
|
|
|
547.6
|
|
|
552.4
|
Goodwill
|
|
|
|
419.9
|
|
|
419.9
|
Deferred income tax
assets
|
|
|
|
18.0
|
|
|
19.1
|
Other non-current
assets
|
|
|
|
158.6
|
|
|
139.0
|
Total
assets
|
|
|
$
|
1,807.1
|
|
$
|
1,750.8
|
|
|
|
|
|
|
|
|
Liabilities and
shareholders' equity
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
Accounts payable and
accrued liabilities
|
|
|
$
|
146.0
|
|
$
|
124.3
|
Income taxes
payable
|
|
|
|
12.1
|
|
|
11.9
|
Contract
liabilities
|
|
|
|
110.2
|
|
|
110.8
|
Current portion of net
employee benefit payable
|
|
|
|
49.4
|
|
|
54.1
|
Current portion of
lease liabilities
|
|
|
|
5.8
|
|
|
6.7
|
Other current
liabilities
|
|
|
|
10.0
|
|
|
10.8
|
|
|
|
|
333.5
|
|
|
318.6
|
Non-current
liabilities:
|
|
|
|
|
|
|
|
Net employee defined
benefit payable
|
|
|
|
22.6
|
|
|
21.5
|
Lease
liabilities
|
|
|
|
0.6
|
|
|
1.6
|
Long-term
debt
|
|
|
|
268.7
|
|
|
243.6
|
Deferred income tax
liabilities
|
|
|
|
162.6
|
|
|
163.8
|
Other non-current
liabilities
|
|
|
|
1.0
|
|
|
1.1
|
Total
liabilities
|
|
|
|
789.0
|
|
|
750.2
|
|
|
|
|
|
|
|
|
Shareholders'
equity
|
|
|
|
|
|
|
|
Common
shares
|
|
|
|
952.1
|
|
|
951.6
|
Contributed
surplus
|
|
|
|
26.1
|
|
|
25.0
|
Accumulated other
comprehensive income
|
|
|
13.9
|
|
|
14.1
|
Retained
earnings
|
|
|
|
26.0
|
|
|
9.9
|
Total
equity
|
|
|
|
1,018.1
|
|
|
1,000.6
|
|
|
|
|
|
|
|
|
Total liabilities
and equity
|
|
|
$
|
1,807.1
|
|
$
|
1,750.8
|
|
|
|
|
|
|
|
|
|
MDA Ltd.
Unaudited Interim Condensed Consolidated
Statement of Cash Flows
For the three months ended March 31,
2023 and 2022
(In millions of Canadian dollars)
|
|
Three months
ended
|
Three months
ended
|
|
|
March 31,
2023
|
March 31,
2022
|
Cash flows from
operating activities
|
|
|
|
|
|
Net
income
|
|
$
|
16.1
|
$
|
8.4
|
Adjustments:
|
|
|
|
|
|
Income tax
expense
|
|
|
8.1
|
|
3.1
|
Depreciation of
property, plant and equipment
|
|
|
2.8
|
|
2.5
|
Depreciation of
right-of-use assets
|
|
|
2.0
|
|
2.1
|
Amortization of
intangible assets
|
|
|
14.6
|
|
15.2
|
Share-based
compensation expense
|
|
|
1.2
|
|
1.6
|
Investment tax credits
accrued during the period
|
|
|
(7.1)
|
|
(22.7)
|
Finance
costs
|
|
|
2.2
|
|
4.3
|
Unrealized loss on
financial instruments
|
|
0.5
|
|
5.3
|
Changes in operating
assets and liabilities
|
|
|
9.1
|
|
(5.1)
|
|
|
|
49.5
|
|
14.7
|
Interest
paid
|
|
|
(4.0)
|
|
(0.6)
|
Income tax
recovered
|
|
|
0.3
|
|
0.6
|
Net cash from
operating activities
|
|
|
45.8
|
|
14.7
|
|
|
|
|
|
|
Cash flows from
investing activities
|
|
|
|
|
|
Purchases/construction
of property and equipment
|
|
|
(29.7)
|
|
(24.9)
|
Purchases/development
of intangible assets
|
|
|
(10.8)
|
|
(12.2)
|
Net cash used in
investing activities
|
|
|
(40.5)
|
|
(37.1)
|
|
|
|
|
|
|
Cash flows from
financing activities
|
|
|
|
|
|
Borrowings from senior
credit facility
|
|
|
25.0
|
|
—
|
Payment of lease
liability (principal portion)
|
|
|
(1.9)
|
|
(2.1)
|
Proceeds from stock
options exercised
|
|
|
0.4
|
|
—
|
Net cash provided by
(used in) financing activities
|
|
|
23.5
|
|
(2.1)
|
|
|
|
|
|
|
Net increase
(decrease) in cash
|
|
|
28.8
|
|
(24.5)
|
Net foreign exchange
differences on cash
|
|
|
(0.2)
|
|
0.4
|
Cash, beginning of
period
|
|
|
39.3
|
|
83.6
|
Cash, end of
period
|
|
$
|
67.9
|
$
|
59.5
|
RECONCILIATON OF NON-IFRS MEASURES
The following table provides a reconciliation of net income to
EBITDA and adjusted EBITDA:
|
First quarters
ended
|
(in millions of
Canadian dollars)
|
March 31,
2023
|
March 31,
2022
|
Net income
|
|
|
$
|
16.1
|
|
|
$
|
8.4
|
Depreciation and
amortization
|
|
|
|
6.6
|
|
|
|
5.8
|
Amortization of
intangible assets
|
|
|
|
12.8
|
|
|
|
14.0
|
Income tax
expense
|
|
|
|
8.1
|
|
|
|
3.1
|
Finance
costs
|
|
|
|
2.2
|
|
|
|
4.3
|
EBITDA
|
|
|
$
|
45.8
|
|
|
$
|
35.6
|
Unrealized foreign
exchange loss
|
|
|
|
1.4
|
|
|
|
2.0
|
Unrealized loss on
financial instruments
|
|
|
|
0.5
|
|
|
|
5.3
|
Share based
compensation
|
|
|
|
1.2
|
|
|
|
1.6
|
Adjusted
EBITDA
|
|
|
$
|
48.9
|
|
|
$
|
44.5
|
Adjusted EBITDA
margin
|
|
24.2 %
|
|
34.7 %
|
|
|
|
|
|
|
|
|
|
|
|
SOURCE MDA Ltd.