Mr. Mike Greenley reports

MDA REPORTS THIRD QUARTER 2023 RESULTS

MDA Ltd. has released its financial results for the third quarter ended Sept. 30, 2023.

Q3 2023 highlights:

• Strong top-line growth with revenues of $204.7-million, up 19 per cent year over year;
• Solid profitability with adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $42.8-million, up 10 per cent year over year;
• Robust adjusted EBITDA margin of 20.9 per cent;
• Record backlog of $3.1-billion at quarter-end, including the recently announced Telesat Lightspeed LEO (low Earth orbit) constellation contract award of $2.1-billion;
• Announced and, subsequent to quarter-end, closed acquisition of SatixFy Space Systems U.K. Ltd., the digital payload division of SatixFy Communications Ltd.;
• Updated 2023 full-year financial outlook.

"MDA delivered another solid quarter in Q3 showcasing the team's continued strong execution and the momentum we are seeing in our business and end markets," said Mike Greenley, chief executive officer of MDA. "We continue to focus on our growth strategy and growing our book of business. In Q3, we announced that MDA was awarded a $2.1-billion contract from Telesat to act as the prime satellite contractor on the Telesat Lightspeed LEO constellation; this is our second prime satellite contract in 18 months and a testament to MDA's innovative technology and advanced manufacturing capabilities in this market.

"We also recently closed our acquisition of the digital payload division of SatixFy Communications, announced in Q3, as we continue to invest in our digital satellite technology and talent to maximize our market opportunity. Additionally, we are on pace with the development of Chorus, our next-generation Earth observation constellation. Elements of Chorus are now in production at our Montreal facility and we recently announced the selection of SpaceX as our launch partner with a confirmed launch window of Q4 2025," continued Mr. Greenley.

"With our backlog at a record level, our teams are laser focused on execution and delivering on our customer commitments. Given the strong execution year to date, we are raising our 2023 financial guidance."

Q3 2023 highlights

Q3 revenues of $204.7-million were up 19 per cent year over year, driven by higher revenues across the company's three business areas with strong contributions from satellite systems and robotics and space operations businesses.

Adjusted EBITDA of $42.8-million in Q3 2023 was up 10 per cent year over year, driven by higher volumes of work across the company's businesses.

Adjusted EBITDA margin was 20.9 per cent in Q3 2023, compared with 22.6 per cent in Q3 2022. The year-over-year change in adjusted EBITDA margin was largely in line with the variance in gross margin over the same period driven by evolving program mix.

Backlog grew to $3.1-billion at quarter-end, which includes the recently announced Telesat Lightspeed LEO constellation award valued at $2.1-billion, where MDA will be responsible for the design, manufacture, assembly and test of 198 satellites. This compares with a backlog of $1.4-billion at the end of 2022.

Operating cash flow was a use of $30-million in Q3 2023, compared with an inflow of $7-million in Q3 2022. The year-over-year decrease in operating cash flow was primarily driven by higher working capital requirements in Q3 2023 as a result of the timing of certain milestone payments versus the same period last year.

Healthy financial position with net debt to adjusted EBITDA ratio of 1.7 times at quarter-end.

The company announced and, subsequent to quarter-end, closed the acquisition of SatixFy Space Systems U.K., the digital payload division of SatixFy Communications. The transaction, valued at $40-million (U.S.), will help further strengthen MDA's global leadership position in the growing market for digital satellite communications solutions.

Subsequent to quarter-end, MDA announced that it has selected SpaceX as the launch partner for its Chorus constellation, which is scheduled to launch on the Falcon 9 rocket in Q4 2025 from Florida.

2023 financial outlook

As a leading global space technology provider, the company is leveraging its capabilities and expertise to execute on targeted growth strategies across its end markets and business areas. The company's strategic initiatives, which span across its three businesses, include expanding the company's share of the growing constellation market, leveraging the company's leading robotics technology platform to capitalize on emerging commercial opportunities and further strengthening the company's positioning in geointelligence through the development of the company's Chorus Earth observation constellation. MDA continues to make good progress against its long-term strategic plan.

MDA is well positioned to capitalize on strong customer demand and robust market activity given the company's diverse and proven technology offerings. The company's growth pipeline is significant and underpinned by existing and new programs and the company's book of business is healthy. MDA sees activities ramping up in line with the company's expectations and is encouraged by the team's solid execution. MDA continues to closely monitor developments related to supply chain disruptions and is taking pro-active measures across the company's three business areas to mitigate the impact on its operations to the extent possible.

For fiscal 2023, the company is narrowing its full-year revenue guidance to $790-million to $810-million from $785-million to $810-million previously, representing robust year-over-year growth of approximately 25 per cent at the midpoint of guidance. MDA is raising its 2023 adjusted EBITDA guidance to $165-million to $170-million from $155-million to $165-million previously, representing approximately 20-per-cent to 21-per-cent adjusted EBITDA margin. MDA is narrowing its 2023 capital expenditures range to $200-million to $210-million from $200-million to $220-million previously, comprising primarily growth investments to support Chorus and the previously outlined growth initiatives across the company's three business areas.

Revenues

Consolidated revenues for the third quarter of 2023 were $204.7 million, representing an increase of $32.7 million (or 19.0 per cent) from the third 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, revenues in Geointelligence for the third quarter of 2023 were $48.4 million, which represents an increase of $2.9 million (or 6.4 per cent) from the same period in 2022 due to slightly higher volume of work. Revenues in Robotics & Space Operations for the third quarter of 2023 were $61.9 million, which represents an increase of $7.3 million (or 13.4 per cent) from the same period in 2022. This year over year increase is primarily driven by the higher volume of work performed on the Canadarm3 program. Revenues in Satellite Systems for the third quarter of 2023 were $94.4 million, which represents an increase of $22.5 million (or 31.3 per cent) from the same period in 2022 driven by higher volumes on new programs including the Globalstar program which was awarded in Q1 2022.

Consolidated revenues for the nine months ended September 30, 2023 were $602.6 million, which were $147.5 million (or 32.4 per cent) higher than the same period in 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, revenues in Geointelligence for the nine months ended September 30, 2023 were $147.6 million, which represents an increase of $6.2 million (or 4.4 per cent) from the same period in 2022 reflecting slightly higher volume of work. Revenues in Robotics & Space Operations for the nine months ended September 30, 2023 were $183.5 million, which represents an increase of $37.7 million (or 25.9 per cent) from the same period in 2022. The year over year revenue increase is primarily driven by the higher volume of work performed on the Canadarm3 program. Revenues in Satellite Systems for the nine months ended September 30, 2023 were $271.5 million, which represents an increase of $103.6 million (or 61.7 per cent) from the same period in 2022 primarily driven by higher volumes on new 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. Q3 2023 gross profit of $57.7 million represents a $1.3 million (or 2.3 per cent) increase over Q3 2022 driven by higher volume of work performed year over year. Gross margin in Q3 2023 was 28.2 per cent, which is in line with our expectations as the Company's program mix evolves. Comparatively, gross margin in Q3 2022 was 32.8 per cent.

For the nine months ended September 30, 2023, gross profit of $186.2 million represents a $16.7 million (or 9.9 per cent) increase over 2022 driven by higher volume of work performed year over year, partially offset by $16.8 million of higher ITCs recorded in Q1 2022 related to the resolution of historical claims. Gross margin for the nine months ended September 30, 2023 was 30.9 per cent, which is in line with our expectations as the Company's program mix evolves. Comparatively, gross margin in 2022 was 33.6 per cent excluding the aforementioned impact of the historical ITC claims recognized in Q1 2022.

Adjusted EBITDA and Adjusted EBITDA Margin

Adjusted EBITDA for the third quarter of 2023 was $42.8 million compared with $38.8 million for the third quarter of 2022, representing an increase of $4.0 million (or 10.3 per cent) year over year driven by higher gross profit as we continue to execute on our backlog. Adjusted EBITDA margin was 20.9 per cent for the third quarter of 2023 compared with 22.6 per cent for the third quarter of 2022, which is generally in line with the variance in gross margin year over year.

Adjusted EBITDA for the nine months ended September 30, 2023 was $132.1 million compared with $118.0 million for the same period in 2022, representing an increase of $14.1 million (or 11.9 per cent) year over year. Adjusted EBITDA for the nine months ended September 30, 2022 included $16.8 million of income from the aforementioned resolution of historical ITC claims. When excluding the impact of the $16.8 million related to historical ITC claims, Adjusted EBITDA increased $30.9 million (or 30.5 per cent) year over year. The improvement was driven by higher volumes of work performed year over year. Adjusted EBITDA margin was 21.9 per cent for the nine months ended September 30, 2023 compared with 22.2 per cent in 2022, excluding the previously noted historical ITC claims resolution.

Backlog

Backlog as at September 30, 2023 was $3,068.7 million, an increase of $1,663.6 million compared with the backlog at September 30, 2022 driven by new order bookings including the recently announced Telesat Lightspeed LEO constellation, partially offset by continued conversion of our backlog into revenue. The following table shows the build up of backlog for Q3 and the nine months ended September 30, 2023 as compared with the same periods in 2022.

CONFERENCE CALL AND WEBCAST

MDA will host a conference call and webcast to discuss these financial results on Wednesday, November 8, 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 10181404. 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 15, 2023, by dialing 1-888-390-0541 and entering the passcode 181404 #.

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 2,900 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.

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