Release Date: March 07, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- MDA Space Ltd (MDALF, Financial) secured $2.4 billion in new awards in 2024, including significant contracts like Canadarm3.
- The company reported a 34% year-over-year increase in revenues, reaching $1.1 billion, and exceeded its adjusted EBITDA guidance with a 25% increase to $217 million.
- MDA Space Ltd (MDALF) achieved a strong operating cash flow of $816 million and free cash flow of $615 million, turning free cash flow positive one year ahead of plan.
- The company has a robust backlog of $4.4 billion, providing good revenue visibility for 2025 and beyond, with recent awards bringing the backlog closer to $5 billion.
- MDA Space Ltd (MDALF) is well-positioned for future growth, with a 2025 revenue outlook of $1.5 billion to $1.65 billion, representing approximately 45% year-over-year growth at the midpoint.
Negative Points
- The company faces potential challenges from recently imposed US tariffs and Canadian counter-tariffs, although it considers the situation manageable.
- Gross margin decreased from 30.2% in 2023 to 26.1% in 2024, reflecting an evolving program mix and higher depreciation expenses.
- Revenues in the GEO-intelligence business saw a slight decrease of 5% year-on-year in Q4 2024 due to the timing of program renewals.
- The legacy Globalstar contract is coming to an end, which may impact revenue contributions from this source.
- The company anticipates significant capital expenditures of $210 million to $240 million in 2025, which could impact free cash flow if not managed effectively.
Q & A Highlights
Q: Can you help us understand the sensitivity of your business to potential tariffs and any mitigation strategies you have in place?
A: Mike Greenley, CEO: We have done detailed work and are deeply engaged with governments and agencies on both sides of the border. We believe our potential tariff exposure is manageable. Approximately 90% of our backlog is outside the US, and only about 25% of our suppliers are based in the US. We are confident in our ability to manage the situation without significant impact on our business.
Q: Have you seen any changes in customer discussions or competitive landscape due to SpaceX or Starlink's activities?
A: Mike Greenley, CEO: We have not seen any changes in our discussions or pipeline. Our new business activity remains robust, and we continue to see strong interest in our MDA Aurora satellites. The announcement of Apple working with SpaceX did not negatively impact us, as demonstrated by our contract with Globalstar.
Q: Can you provide more details on the guidance update and the expected contributions from key programs like Lightspeed, Globalstar, and Canadarm3?
A: Guillaume Lavoie, CFO: The main drivers for our guidance are the ramp-up of the Telesat Lightspeed program, continued ramp on the newly awarded Globalstar contracts, and increased revenues from the Canadarm3 program. The legacy Globalstar contract is coming to an end, but overall, we are confident in achieving our revenue guidance of $1.5 billion to $1.65 billion for 2025.
Q: Is the Montreal facility on track, and does your guidance depend on work flowing through it this year?
A: Mike Greenley, CEO: The Montreal facility is on track, with the exterior closed in as planned. The interior work and production equipment installation will be completed by the end of the year. Our 2025 guidance does not depend on production from this facility, which is needed for activities in 2026.
Q: How does the current geopolitical climate and US government actions impact your pipeline and international customer investments in space infrastructure?
A: Mike Greenley, CEO: We are seeing increased enthusiasm from countries to invest in their own space infrastructure, driven by geopolitical tensions and a desire for increased sovereignty. While these are early conversations, they could lead to new opportunities in our pipeline as countries explore expanding their space capabilities.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
