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MDA Space Investor Presentation 2021
48075_rns_2021-03-22_68255682-4dfa-40ae-9b0f-f5fd71acab0e.pdf
Investor Presentation
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This presentation is dated March 22, 2021. A preliminary base PREP prospectus containing important information relating to the securities described in this document has been filed with the securities regulatory authorities in each of the provinces and territories of Canada. A copy of the preliminary base PREP prospectus, and any amendment, is required to be delivered with this document. The preliminary base PREP prospectus is still subject to completion. There will not be any sale or acceptance of an offer to buy the securities until a receipt for the final base PREP prospectus has been issued. This document does not provide full disclosure of all material facts relating to the securities offered. Investors should read the preliminary base PREP prospectus, the final base PREP prospectus, the supplemented PREP prospectus and any amendment for disclosure of those facts, especially risk factors relating to the securities offered, before making an investment decision.
M
Roadshow
Management Presentation
March 2021
MDA
Disclaimer
Prospective investors should rely only on the information contained in the Company's preliminary base PREP prospectus dated March 22, 2021 (the "prospectus"). The prospectus is still subject to completion. There will not be any sale or any acceptance of an offer to buy the securities until a receipt for the final base PREP prospectus has been issued. This presentation is qualified in its entirety by reference to, and must be read in conjunction with, the information contained in the prospectus. A prospective investor is not entitled to rely on parts of the information contained in this presentation to the exclusion of others. Neither MDA Ltd. (the "Company", "MDA", "us", "we" or "our") nor any of the Underwriters have authorized anyone to provide prospective investors with additional or different information. The Underwriters are not offering to sell the common shares in any jurisdiction where the offer or sale of such securities is not permitted. No securities regulatory authority has expressed an opinion about the common shares discussed in this presentation and it is an offence to claim otherwise.
For prospective investors outside Canada, neither we nor any of the Underwriters has done anything that would permit this offering or possession or distribution of the prospectus in any jurisdiction where action for that purpose is required, other than in Canada. Prospective investors are required to inform themselves about, and to observe any restrictions relating to, this offering and the possession or distribution of the prospectus.
THIS DOCUMENT IS BEING FURNISHED SOLELY IN RELIANCE ON APPLICABLE EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS UNDER THE U.S. SECURITIES ACT OF 1933. AS AMENDED, MDA'S SECURITIES HAVE NOT AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OR ANY STATE SECURITIES LAWS, AND MAY NOT BE OFFERED OR SOLO WITHIN THE UNITED STATES UNLESS AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE U.S. SECURITIES ACT IS AVAILABLE.
ACCORDINGLY, ANY OFFER OR SALE OF SECURITIES WILL ONLY BE OFFERED OR SOLO (I) WITHIN THE UNITED STATES IN RELIANCE UPON APPLICABLE EXEMPTIONS UNDER THE U.S. SECURITIES ACT AND (II) OUTSIDE THE UNITED STATES IN OFFSHORE TRANSACTIONS IN ACCORDANCE WITH REGULATIONS UNDER THE U.S. SECURITIES ACT. THIS COMMUNICATION SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES, NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE OR JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE OR JURISDICTION.
An investment in common shares is subject to a number or risks that should be considered by a prospective purchaser. Prospective purchasers should carefully consider the risk factors described under "Risk Factors" in the prospectus before purchasing common shares.
In this presentation, all amounts are in Canadian dollars, unless otherwise indicated. Capitalized terms that are not defined in this presentation have the meanings ascribed to them in the prospectus. Any graphs, tables or other information in this presentation demonstrating the historical performance of MDA or of any other entity contained in this presentation are intended only to illustrate past performance and are not necessarily indicative of future performance of MDA or such entities.
This presentation includes industry and market data derived from internal analyses based upon publicly available data or other proprietary research and analysis, surveys or studies conducted by third parties and industry and general publications. Unless otherwise indicated, information contained in this presentation concerning our industry and the markets in which we operate, including our general expectations and market position, market opportunity and market size, is based on these various sources. Because this information involves a number of assumptions and limitations, you are cautioned not to give undue weight to such information. We have not independently verified market data and industry forecasts provided by any of these or any other third-party sources referred to in this presentation.
Unless otherwise indicated, financial information included in this presentation has been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board ("IFRS"), and may therefore not be comparable to financial statements of United States companies prepared in accordance with U.S. generally accepted accounting principles.
This presentation makes reference to certain non-IFRS financial measures and industry metrics, including Adjusted EBITDA. These measures are not recognized measures under IFRS, do not have a standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement IFRS financial measures by providing further understanding of the Company's results of operations from management's perspective. The Company believes that securities analysis, investors and other interested parties frequently use non-IFRS financial measures in the evaluation of issuers. The Company's management also uses non-IFRS financial measures in order to facilitate operating performance comparisons from period to period. See "Non-IFRS Financial Measures" in the prospectus and see Appendix for a reconciliation to the most comparable IFRS measures.
This presentation contains "forward-looking information" within the meaning of applicable Canadian securities laws. Such forward-looking information includes, but is not limited to, information with respect to the Company's objectives and strategies to achieve these objectives, as well as information with respect to the Company's beliefs, plans, expectations, anticipations, estimates, intentions and views of future events. Discussions containing forward-looking information may be found, among other places, in the sections of the prospectus entitled "Prospectus Summary", "Growth Strategies", "The Company", "Industry", "Use of Proceeds", "Management's Discussion and Analysis" and "Risk Factors".
In some cases, forward-looking information can be identified by words or phrases such as "forecast", "target", "goal", "may", "might", "will", "expect", "anticipate", "estimate", "intend", "plan", "indicate", "seek", "believe", "predict", or "likely", or the negative of these terms, or other similar expressions intended to identify forward-looking information. In addition, any statements that refer to expectations, intentions, projections or other characterizations of future events or circumstances contain forward-looking information. Statements containing forward-looking information are not historical facts. The Company has based the forward-looking information on its current expectations and projections about future events and financial trends that it believes might affect its financial condition, results of operations, business strategy and financial needs. The forward-looking information includes, among other things, statements relating to: the Offering size, the Company's expectations regarding certain of its future results and information, including, among others, revenue, expenses, Adjusted EBITDA, Adjusted EBITDA margin, sales growth, expenditures, operations and use of future cash flow; the Company's ability to execute on its key strategic growth priorities; the Company's anticipated cash needs and its needs for additional financing; the Company's plans for and timing of expansion of its services; expectations regarding industry trends, overall market growth rates and the Company's future growth rates, plans and strategies; the Company's ability to attract new clients and further develop and maintain existing clients; the Company's ability to continue to attract and retain personnel; the Company's competitive position and the regulatory environment in which it operates; anticipated trends and challenges in the Company's business and the markets in which it operates; and the gross and net proceeds of the Offering and the Company's anticipated use of such proceeds.
In addition, MDA's assessments of, and targets for, revenue, Adjusted EBITDA and Adjusted EBITDA margin are considered forward-looking information. See "The Company", "Industry" and "Growth Strategies" and the Appendix hereto for additional information concerning the Company's strategies, assumptions and market outlook in relation to these assessments.
Statements containing forward-looking information are based on certain assumptions and analyses made by the Company in light of management's experience and perception of historical trends, current conditions and expected future developments and other factors it believes are appropriate, and are subject to risks and uncertainties. These assumptions include our ability to maintain and expand the scope of our business; our ability to execute on our growth strategies; assumptions relating to government support and funding levels for space programs and missions; continued and accelerated growth in the global space economy; the impact of competition; our ability to retain key personnel; our ability to obtain and maintain existing financing on acceptable terms; changes and trends in our industry or the global economy; currency exchange and interest rates; and changes in laws, rules, regulations.
Although the Company believes that the assumptions underlying these statements are reasonable, they may prove to be incorrect and there can be no assurance that actual results will be consistent with the forward-looking information. Given these risks, uncertainties and assumptions, prospective purchasers of Offered Shares should not place undue reliance on the forward-looking information. Whether actual results, performance or achievements will conform to the Company's expectations and predictions is subject to a number of known and unknown risks, uncertainties, assumptions and other factors, including those listed under "Risk Factors" in the prospectus.
These factors should not be considered exhaustive and should be read together with the other cautionary statements in this presentation and the prospectus. See "Risk Factors" and "Forward-Looking Information" in the prospectus.
If any of these risks or uncertainties materialize, or if assumptions underlying the forward-looking information prove incorrect, actual results might vary materially from those anticipated in the forward-looking information.
Given these risks and uncertainties, investors are cautioned not to place undue reliance on the forward-looking information. Any forward-looking information that is made in this presentation speaks only as of the date of such statement, and the Company undertakes no obligation to update any forward-looking information or to publicly announce the results of any revisions to any of those statements to reflect future events or developments, except as required by applicable securities laws.
MDA
Today's Presenters
Mike Greenley
CEO
Vito Culmone
CFO
MDA
Indicative Offering Summary Overview
| Issuer | MDA Ltd. |
|---|---|
| Ticker / Listing | MDA / TSX |
| Offering Size | C$500MM |
| Offer Format | Long-form Canadian Prospectus / 144A |
| Expected Pricing | March 31, 2021 |
| Overallotment Option | 15% of the Offered Shares (100% Primary) |
| Use of Proceeds | Reduce outstanding indebtedness and fund ongoing growth initiatives |
| Lock-up | 180 days after the Closing Date for the Company and 100% of all shareholders immediately prior to Closing |
| Active Bookrunners | BMO Capital Markets, Morgan Stanley, Scotiabank |
| Passive Bookrunners | Barclays Capital, RBC Capital Markets |
| Co-Managers | Canaccord Genuity, CIBC, National Bank, Stifel |
MDA
We Are the Most Compelling Investment Opportunity in Space
The Space Market is Large and Expanding Rapidly
MDA directly participates in the fastest growing areas of the space economy
MDA is a Leader Across the Space Economy
Partner of choice for emerging space companies, prime contractors, and government agencies worldwide
An Important Transformation has Taken Place
Our company and the space sector have experienced rapid change over the last 12 months
Best-in-Class Growth Profile
Secured flagship programs and large identified pipeline drive robust and highly visible growth
MDA
The Opportunity in Space is Large and Expanding Rapidly
7
2020 Was a Pivotal Year for Space
1,275 Satellites Launched (160% YoY Increase)
US$8.9Bn of Equity Capital Invested (~50% YoY Increase)
US$83Bn of Government Space Budgets (All-time High)
NASA to Spend US$28B Over 5-yrs on Return to the Moon Program
Over 80,000 LEO Satellite License Requests Received by FCC
First Successful Commercial On-Orbit Satellite Servicing Mission
The First Private Rocket Reached the ISS
C-Band Spectrum Auction Drove 13 New GEO SATCOM Contracts
IMDA
WE ARE ADVANCING SPACE INNOVATION EVERY DAY
MDA Video
8
MDA
We Develop Advanced Space Technologies to Enable Mission Firsts
Three generations of RADARSAT satellites operating since 1995
MDA robotics on world's first autonomous on-orbit servicing mission
MDA space robotics and communications on ISS since 2001
MDA sensors have been operational on 8 Cygnus missions
MDA sensors and robotics have been operational on Mars since 2008
MDA satellites antennas, payloads and electronics have flown on more than 300 space flight missions
MDA technologies on 3 LEO Constellations
MDA sensor scanned Asteroid Bennu 300 million km away
MDA
9
MDA
We Serve Nearly Every Sector of the Rapidly Growing Space Economy
The Space Ecosystem
Where MDA Plays
MDA
Our Customers and Partners Span the Space Economy…
...With a Balanced Mix Across Customer Type and Geographies
2020A Revenue By Customer Type
2020A Revenue By Geography
MDA
Our Agility and Scale Enable Us to Deliver What Matters Most to Customers
| What Matters to Customers | New Space Companies | LMDA | Large Prime Contractors |
|---|---|---|---|
| Confidence in Mission Success | ☐ | ☐ | ☑ |
| Customized & Innovative Solutions | ☑ | ☑ | ☐ |
| Commercial R&D Investment | ☑ | ☑ | ☐ |
| Speed to Market | ☑ | ☑ | ☐ |
| Cost Efficient Solutions | ☑ | ☑ | ☐ |
| Expertise in Complex Missions | ☐ | ☐ | ☑ |
| Proven and Optimized Supply Chain | ☐ | ☐ | ☑ |
13
Team and Culture to Win
Our Status as a Space Pioneer Attracts World Class Talent
World Class Team of Space Pioneers
1,100 Engineers and 2,000 Employees Globally
Deep Technical Knowledge
10+ Years Average Tenure of Our Engineering Talent
Investing in Human Capital
Onboarding 400 Engineers Over the Next 5 Years
Guiding Principles Drive our Growth
Integrity, Collaboration, Operational Excellence, Inspiration, Responsible
Management Has Over 175 Years of Combined Experience
Mike Greenley
CEO
Years of experience: 30
Vito Culmone
CFO
Years of experience: 33
Martin Herman
VP, Legal & General Counsel
Years of experience: 24
Minda Suchan
VP, Geantelligence
Years of experience: 25
Tim Kopra
VP, Robotics & Space Operations
Years of experience: 35
Amer Khouri
VP, Satellite Systems
Years of experience: 31
IMDA
In 2020 We Transformed…
Separation from Maxar and SSL
Newly Accessible Partnership Opportunities
Unconstrained Ability to Invest in Business
Renewed and Purpose-Built Leadership Team
...Driving Unprecedented Growth
Selected for over $4Bn of New Contracts in 2020
3 Flagship Programs Underway with Initial Phase Contracts
Selected to Provide Technology on 6 Lunar Missions
SARnext Announcement with New Radar Satellite Capability
4 New US-based Primes Requested Bids
6 New LEO Constellation Opportunities
MDA
Recently Secured Flagship Programs
Flagship Programs Represent ~$3.5Bn of Total Revenue to MDA
Canadarm3
AI-based robotic system for the Lunar Gateway mission
C$1.4Bn+ revenue over a 5-year build with 15 years of operational services
Commercialize technologies for in-space applications
Telesat Lightspeed
DRAs and gateway antennas and spacecraft AI&T for 300+ LEO satellites
C$800MM revenue opportunity (2021-2025)
Opportunity for an additional 1,300 LEO satellites
Canadian Surface Combatant
Design and integration of Electronic Warfare system for 15 state-of-the-art warships
C$1.5Bn+ revenue (2020-2040)
Opportunity to export CSC technologies to international markets
M
High Degree of Visibility into 2022E Revenue and EBITDA
C$MM
~78% of Revenue Growth Driven by Secured Flagship Programs
411
| 2020A Revenue | Secured Flagship Programs | Execute on Identified Pipeline | 2022E Revenue (2) | |
|---|---|---|---|---|
| Adjusted EBITDA | $85MM (1) | ~$170MM (2) | ||
| Adjusted EBITDA Margin | ~21% | ~20% (2) |
Notes:
1) Excludes CEWS impact of ~$42MM
2) Targets are based on the Company's current expectations and are subject to significant risks and assumptions (See Appendix – "Financial Target Assumptions")
IMDA
Large Pipeline and Strong Execution Supports Growth into $1.5Bn of 2025E Revenue
C$Bn
Revenue Targets (1)
$15Bn+ 5-Year Cumulative Pipeline
(Excl. Flagship Programs
$2Bn+ Robotics & Space Operations
Annual Average Pipeline: ~$400MM
$10Bn+ Satellite Systems
Annual Average Pipeline: ~$2Bn
$3Bn+ Geointelligence
Annual Average Pipeline: ~$600MM
Potential Upside to 2025E Target
$200Bn Annual TAM
($1Tn 5-Year Cumulative)
Flagship Program Follow-On Opportunities
Grow Constellation Market Share
Maximize Robotics & Space Mission Participation
International Expansion and Strategic M&A
Notes:
1) Targets are based on the Company's current expectations and are subject to significant risks and assumptions (See Appendix – "Financial Target Assumptions")
IMDA
Robotics & Space Operations
Mission Kits and Partnerships for On-Orbit Ops
Rapid Growth of the In-Space Economy
Space Exploration
Space Mining
Lunar Mobility Logistics and Support
Space Tourism
On-Orbit Servicing, Assembly, and Manufacturing
Debris Removal
The Technologies We Deliver
Sensors
On-Orbit. Cameras. LiDAR. Lunar Landings
Robotics
Operational Support. Industry Standard for Grapple Fixtures
On-Orbit Servicing and Assembly
Integrated Robotic Solutions. Vision and Targeting Systems
Rovers
Planetary Vehicle Systems. Sample Return
Operations
Support for Robotics on the ISS. Operations Control Centers
Unique Technology. Proven Flight Heritage. Full Mission Life Cycle Capabilities
IMDA
The Leader in Space Robotics Solutions
Our Market Leadership
World's First 3D Scan of an Asteroid From Orbiting Spacecraft OSIRIS-Rex
Over 3 Million Engineering Hours Supporting On-Orbit Robotic Operations
Canadarm1, Canadarm2, Dextre
World's First Autonomous On-Orbit Servicing Mission Orbital Express
Over 12 Years Operating on Mars
Phoenix Lander, Curiosity Rover, and ExoMars underway
World's First Commercial Robotics Operations Control Center Under development
Our Secured Future Opportunity
Canadarm3
Design, Build, and Servicing
~$1.4Bn of Revenue Over the Next 20 Years (~$900MM from 2022-2026)
MDA
High Degree of Visibility into 2022E Revenue
Robotics & Space Operations
C$MM
~81% of Revenue Growth Driven by Secured Flagship Programs
2020A Revenue
Secured Flagship Programs
42
2022E Revenue (1)
Notes:
1) Targets are based on the Company's current expectations and are subject to significant risks and assumptions (See Appendix – "Financial Target Assumptions")
MDA
Large Pipeline and Strong Execution Supports Growth into 2025E Revenue
Robotics & Space Operations
C$MM
Revenue Targets (1)
$2Bn+ 5-Year Cumulative Pipeline
(Excl. Flagship Program)
~$725MM Space Agency Programs
Annual Average Pipeline: ~$145MM
~$1Bn Commercial Sensors, Robotics, and Space Operations
Annual Average Pipeline: ~$200MM
~$350MM New Mission Content
Annual Average Pipeline: ~$70MM
Potential Upside to 2025E Target
$5Bn Annual TAM
($25Bn 5-Year Cumulative)
On-Orbit Servicing, Assembly, and Manufacturing
Commercial Portfolio of Space Robotics and Sensors
Commercial Space Operations Center
Notes:
1) Targets are based on the Company's current expectations and are subject to significant risks and assumptions (See Appendix – "Financial Target Assumptions")
MDA
Satellite Systems
World Leaders in Digital Satellite Solutions
Capitalizing on Proliferation of Satellites
Broadband Internet
5G Backhaul
Connected Vehicles
IoT
Defense Applications
The Technologies We Deliver
LEO Constellations
Cutting Edge Technology. Subsystem Manufacturing. AI&T
GEO Satellites
Payloads. Antennas. Electronics. Range of Digital Products
MEO and Additional Applications
Exploration Sub-systems. Antennas. Electronics. Payloads
Independent Merchant Supplier. High Volume Production. Competitive Pricing and Scheduling. Proven Expertise
IMDA
Cutting Edge Satellite Capabilities
Our Market Leadership
High Volume Manufacturing for LEO Constellations
Significant Expertise Through O3B, Iridium Next, and OneWeb Constellations
Over 300 Satellite Missions
Solutions across full communication frequency band
Proven Software Defined Radio Capability for Space-based Communication
Power and Propulsion Element for Lunar Gateway
Our Secured Future Opportunity
Telesat Lightspeed
DRAs, Gateway Antennas, and Spacecraft AI&T
~$800MM Revenue Over the Next 5 Years
(Opportunity for Additional 1,300 LEO Satellites)
MDA
High Degree of Visibility into 2022E Revenue
Satellite Systems
C$MM
Notes:
1) Targets are based on the Company's current expectations and are subject to significant risks and assumptions (See Appendix – "Financial Target Assumptions")
IMDA
Large Pipeline and Strong Execution Supports Growth into 2025E Revenue
Satellite Systems
C$MM
Revenue Targets (1)
$10Bn+ 5-Year Cumulative Pipeline
(Excl. Flagship Program)
~$3Bn GEO Satellite Sub-systems
Annual Average Pipeline: ~$600MM
~$7Bn LEO Constellations
Annual Average Pipeline: ~$1Bn
~$600MM MEO, Spacecraft, Others
Annual Average Pipeline: ~$120MM
Notes:
1) Targets are based on the Company's current expectations and are subject to significant risks and assumptions (See Appendix – "Financial Target Assumptions")
Potential Upside to 2025E Target
$175Bn Annual TAM
($875Bn 5-Year Cumulative)
Large Constellation Opportunities
Digital Satellite Solutions
Lunar and Spacecraft Communications
MDA
Geointelligence
Towards a Global Earth Information Platform
Address Growing Demand for Earth Intelligence and Analytics
Climate Change Monitoring
Illegal Fishing Detection
Search and Rescue
Agricultural Production Optimization
Intelligence and Surveillance
Commerce and Trade
The Technologies We Deliver
Sense
EO Satellites. UAVs. Maritime. Space Surveillance
Collect and Inform
Ground Stations: Tasking, Data Processing, Storage.
Analyze
Analytics Products. Intelligence Support
End User Operations
Software Platforms for Subscription Services.
Near Real-Time, Actionable Information. Global. Cutting Edge and Fully Integrated EO Solution
IMDA
Differentiated Geointelligence Offerings
Our Market Leadership
World's Most Sophisticated and Taskable SAR Satellite
One of the Largest Radar Information Providers Globally
World's Largest Multi-Sensor Ground Station Network
70 Ground Stations, 25 Countries. 20 Source Satellites
Extensive Data Archive
~70Bn km² of the Earth Imagery Data
Near Real-Time Information Products
Under 10 Minutes from Satellite to Customer
Extensive Expertise in Government Geointelligence Programs
RADARSAT, RADARSAT-2, RADARSAT Constellation Mission, UAV programs
Our Secured Future Opportunities
SARnext
Next Generation EO Mission
$2Bn+ Revenue over 15 Years
Canadian Surface Combatant
Design and Integration of Electronic Warfare System
$1.5Bn+ Revenue from 2020 to 2040
(Across 15 State-of-the-Art Warships)
MDA
High Degree of Visibility into 2022E Revenue
Geointelligence
C$MM
~99% of Revenue Growth Driven by Secured Flagship Programs
Notes:
1) Targets are based on the Company's current expectations and are subject to significant risks and assumptions (See Appendix – "Financial Target Assumptions")
MDA
Large Pipeline and Strong Execution Supports Growth into 2025E Revenue
Geointelligence
C$MM
Revenue Targets (1)
$5Bn+ of Opportunities
(Excl. Flagship Program)
$2Bn+ Earth Observation
(Including SARnext)
$3Bn+ Government Programs
(Including 5 Programs Where We Are the Incumbent)
Notes:
1) Targets are based on the Company's current expectations and are subject to significant risks and assumptions (See Appendix – "Financial Target Assumptions")
Potential Upside to 2025E Target
$18Bn Annual TAM
($90Bn 5-Year Cumulative)
New Source, Analytics, and Platforms for
New Geointelligence Market Verticals
Analytics as a Service
Cloud-Based Ground Stations
MDA
Financial Overview
MDA
MDA is the Most Compelling Space Investment Opportunity
| How we Book and Generate our Revenue | Highly visible and robust growth profile
Highly diversified customer base underpinned by a strong win rate and the agility to meet commercial and government technological demands |
| --- | --- |
| Highly Actionable Upside Potential | Rapid growth of the space economy presents opportunities beyond current targets |
| Recurring Nature of our Business | Full lifecycle solutions with support services that often span decades driving resilient business model
Large, franchise programs that provide expertise and leadership to secure next generation of flagship opportunities |
| Pure-play Space Company |
| --- |
| 30% 5-Year Revenue CAGR (2020A – 2025E)(1) |
| Diversified Customers
Highly diversified base of start-ups, primes, and gov't agencies |
| C$170MM
2022E EBITDA(1) |
Notes:
1) Mid-point of 2022 financial target range; targets are based on the Company's current expectations and are subject to significant risks and assumptions (See Appendix – "Financial Target Assumptions")
MDA
2025E Revenue of $1.5Bn Driven by Secured Flagship Programs, Existing Backlog, and Highly Visible Pipeline (1)
C$MM
~78% of Revenue Growth to 2022E is Driven by Secured Flagship Programs
Notes:
1) Targets are based on the Company's current expectations and are subject to significant risks and assumptions (See Appendix – "Financial Target Assumptions")
Future Upside Driven by Our Market Leadership Within the Rapidly Growing Space Economy
MDA
Sources & Uses and Summary IPO Capitalization
Improved Financial Flexibility to Execute on our Growth Strategies and Enhance Competitive Strengths (C$MM)
Sources & Uses
| Sources | Uses | ||
|---|---|---|---|
| IPO Proceeds | $500 | Repayment of Term Loan Facility | $340 |
| Total Sources | $500 | Cash to Balance Sheet | $130 |
| Fees & Other Expenses | $30 | ||
| Total Uses | $500 |
Summary IPO Capitalization
| Dec-20 | IPO Adjustments | Pro forma IPO | |
|---|---|---|---|
| Cash & Cash Equivalents | $109^{(1)} | $130 | $239 |
| Credit Facility | $412 | ($340) | $72 |
| Notes | $148 | -- | $148 |
| Total Debt | $560 | ($340) | $220 |
| Net Debt | $451 | ($470) | ($19) |
| 2020A Adjusted EBITDA | $127 | -- | $127 |
| Net Leverage | 3.6x | nmf |
Notes:
1) Includes C$30.6MM of cash received subsequent to 31-Dec-20 related to the initial acquisition and shares issued to certain employees.
MDA
Financial Outlook
(C$MM)
| Key Metrics | Outlook^{(1)} |
|---|---|
| 2022E Revenue | $800 million to $900 million |
| 2022E Adjusted EBITDA | $160 million to $180 million |
| 2025E Revenue | $1.5 billion+ |
| Long-Term Adjusted EBITDA Margin | 18% to 20% |
Notes:
1) Targets are based on the Company's current expectations and are subject to significant risks and assumptions (See Appendix – "Financial Target Assumptions")
MDA
Valuation Benchmarking
In accordance with Section 13.7(4) of National Instrument 41-101 – General Prospectus Requirements, all of the information relating to MDA Ltd.’s comparables and any disclosure relating to the comparables, which is contained in the presentation to be provided to potential investors, has been removed from this template version for purposes of its filing on the System for Electronic Document Analysis and Retrieval (SEDAR).
35
IMDA
We Are the Most Compelling Investment Opportunity in Space
We’ll Take You There
36
MDA
Appendix
MDA
Expanding Commercial Earth Observation Opportunity
Best-in-Class Radar EO Platform
Source Data
Radarsat-2: Broad Area and Taskable SAR Satellite
+
Proprietary Ground Stations
World's Largest Network and Multi-Source Data Fusion
+
Data and Analytics Services
Extensive Data Archive
+
High Quality Customer Base
Embedded Across Highly Diversified Customer Base
Growth Initiatives
Enhance Source Data
Expand Information Platform
The Premiere Platform for Ocean Information
Enhance Offering for Existing Customers
Next Generation C-Band – SARnext
Partner Missions
AI-based Information Analytics
Maritime Domain Awareness
Expand Solutions Offering for New Customers
Cloud-Based Ground Stations
Land-Based Market Expansion
MDA
$3Bn+ of Upcoming Government Programs
Incumbent Supplier to Canadian Government. Proven Operational Expertise and Success
DESS-P
Department of National
Defence RCM Follow-On
EOSC
Canadian Space Agency
RCM Follow-On
Multi-Decade Opportunities with Key Execution Phases to Begin by 2025
39
MDA
Historical Revenue Bridge and Adj. EBITDA Margin – 2018A-2020A
(C$MM)
2018A – 2020A Revenue Bridge
Adj. EBITDA Margin
- Geointelligence & Robotics excluding RCM.
- Adjusted EBITDA margin.
- Adjusted EBITDA margin excluding CEWS.
Commentary
- RADARSAT Constellation Mission (RCM) roll-off
- Impact from COVID-19 and Jupiter 3, which operated at a loss
- Increase in Robotics & Space Ops due to organic (e.g. Canadarm) and acquisition (Neptec) related growth
MDA
Adjusted EBITDA Reconciliation
(C$MM)
| 2018A | 2019A | 2020A | |
|---|---|---|---|
| Net Income | $121 | $73 | ($36) |
| Depreciation and Amortization | $13 | $19 | $65 |
| Income Tax Expense | $34 | $4 | $5 |
| Interest | ($5) | $2 | $31 |
| EBITDA | $163 | $99 | $66 |
| Unrealized Foreign Exchange Loss (Gain) | $3 | ($3) | $1 |
| Unrealized Embedded Derivative | -- | -- | ($7) |
| Restructuring Costs | $7 | $8 | $10 |
| Acquisition Costs | -- | $3 | $12 |
| Impairment | -- | $16 | $16 |
| Share Based Compensation | ($3) | $4 | $6 |
| Ukraine Satellite Reserve Release | ($10) | -- | -- |
| Jupiter 3 Non-recurring Loss | -- | -- | $23 |
| Adjusted EBITDA | $161 | $127 | $127 |
| Adjusted EBITDA as % of Revenue | 29% | 26% | 31% |
IMDA
Our World Class Facilities
Gatineau Ground Station
Dreamr Lab
Brampton Task Area
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MDA
Financial Target Assumptions
We believe an opportunity exists to (i) grow our revenues from $411 million in Fiscal 2020 to between $800 and $900 million in Fiscal 2022 and (ii) grow our revenues to over $1.5 billion in Fiscal 2025. These targets do not constitute a forecast or projection. Our strategies to achieve these targets are described under the "Growth Strategies" section of the prospectus. There can be no assurance that we will achieve these targets, and our actual results may vary materially.
Our revenue targets are based on underlying assumptions that we believe are reasonable, including assumptions regarding future revenues from (i) awarded programs (including our flagship programs), (ii) programs and services which are recurring in nature, and (iii) new program awards based on our current new business pipeline and historical track record securing new mandates. Specifically, our revenue targets are based on the following key assumptions, among others:
2022 Revenue Target ($800 to 900 million)
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Flagship Programs. Growth in revenue from our three flagship programs accounts for approximately 78% of the anticipated increase in revenue from Fiscal 2020 to Fiscal 2022. The expected revenue from each of these programs in Fiscal 2022 is based on the currently established scope and timetable for each program and assumes that we will provide our services in accordance with the applicable standards and performance obligations. While there can be no certainty that (i) these programs progress on the currently expected timetable, and (ii) that we will adequately meet the required performance obligations in the coming years, we believe our expectations for Fiscal 2022 revenue from these programs is reasonable based on (i) current information with respect to our work scope and program timetable, and (ii) our historical performance track record of executing and meeting all applicable obligations on similar large programs. Specifically:
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Canadarm3. We expect total cumulative revenue for the life of the project to be approximately $1.4 billion, which includes approximately $900 million to design and build Canadarm3 over a five-year period (2022 to 2026) and $500 million of recurring services and other ongoing operations over a subsequent 15-year period. We also intend to leverage the technology we are developing for Canadarm3 to deliver commercial products and services in the growing on-orbit servicing and in-space manufacturing and assembly markets, which has not been factored into our revenue targets for Canadarm3 in Fiscal 2022 nor for Fiscal 2025.
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Canadian Surface Combatant. MDA is currently under contract with Lockheed Martin Canada as the Electronic Warfare Suite systems integrator for the Canadian Surface Combatant, an advanced and multi-mission combat ship, equipped with next generation technology to capably support and protect the men and women of the Royal Canadian Navy. We expect total cumulative revenue for the life of the project to be approximately $1.5 billion. This value is based on (i) the current design of the ship and specifically the scope of the EW system that MDA is responsible for, and (ii) the current expectation for 15 ships to be delivered over a 15-year period. We also intend to pursue opportunities to sell CSC's sensor, laser warning, and electronic system technologies to international defense customers as they upgrade their naval fleets over time. In addition, we expect to have an opportunity to provide long-term recurring maintenance and in-service support services to the CSC fleet, similar to our role on other defense platforms where we have OEM content. Potential revenue from the international opportunity and the recurring service opportunity is not included in our Fiscal 2022 revenue target, nor our 2025 revenue target.
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Telesat Lightspeed Constellation. We currently expect to complete the bulk of our work on the first phase of the Telesat Lightspeed constellation (300 satellites) from Fiscal 2022 to Fiscal 2024. We expect revenue of $800 million from this program over the next five years. Telesat has a registered license for an additional 1,300 satellites, which represents a potential multibillion-dollar future opportunity for MDA but which is not included in our Fiscal 2022 nor our Fiscal 2025 revenue target.
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Robotics & Space Operations. Growth in revenue in our Robotics & Space Operations business area, excluding revenues from Canadarm3 that are referred to above within our flagship programs, accounts for approximately 9% of the anticipated increase in revenue from Fiscal 2020 to Fiscal 2022. The anticipated revenue level in Fiscal 2022 represents a CAGR of approximately 17% from Fiscal 2020 to Fiscal 2022, which compares to an 11% revenue CAGR realized from Fiscal 2018 to Fiscal 2020. The anticipated revenue level in Fiscal 2022 is supported by our current pipeline of identified opportunities which represents a revenue opportunity in Fiscal 2022 that is 2.6 times greater than our anticipated revenue level. For the purposes of our targeted revenues for Fiscal 2022, we have assumed that we will secure only a portion of these opportunities, consistent with our historical win rate for Robotics & Space Operations contracts, that the projects underlying these new business award opportunities progress within the scope and on the timetable expected, and that we will provide all of the products and services for these programs in accordance with the applicable service standards and performance obligations.
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Satellite Systems. Growth in revenue in our Satellite Systems business area, excluding revenues from Telesat's Lightspeed constellation that are referred to above within our flagship programs, accounts for approximately 12% of the anticipated increase in revenue from Fiscal 2020 to Fiscal 2022. The anticipated revenue level in Fiscal 2022 represents a CAGR of approximately 22% from Fiscal 2020 to Fiscal 2022, which compares to a realized revenue CAGR from Fiscal 2018 to Fiscal 2020 of approximately negative 27%. As described in the MDAA section of this prospectus, revenue in our Satellite Systems business area was materially negatively impacted in Fiscal 2020 due to several factors, including: (i) productivity losses due to COVID-19 which impacted progress on existing programs, which has since been mitigated; (ii) delay in new business awards due to COVID-19, which has since returned to normalized levels; (iii) increased costs associated with the Jupiter 3 satellite program, which resulted in lower revenues and negative gross profit, but is not expected to materially impact future results; and (iv) the substantial completion of several programs that were not fully offset by new business awards. The anticipated revenue level in Fiscal 2022 is supported by our current pipeline of identified opportunities which is significantly higher than at any other point in our history and represents a revenue opportunity in Fiscal 2022 that is 14 times greater than our anticipated revenue level. The significant increase in our current pipeline relative to prior years is due to (i) our separation from Maxar, which has enabled us to significantly expand the type and number of opportunities we pursue, and (ii) a significant increase in demand for new LEO satellite constellations. Specifically, we have identified several new constellation opportunities that represent an estimated cumulative revenue opportunity to MDA of $6.5 billion (2021 to 2025) and we are currently engaged in detailed discussions with respect to a number of these opportunities that represent an estimated cumulative revenue opportunity to MDA of $3.5 billion (2021 to 2025). For the purposes of our targeted revenues for Fiscal 2022, we have assumed that we will secure only a portion of those opportunities consistent with our historical win rate for Satellite Systems contracts, that the projects underlying these new business award opportunities progress within the scope and on the timetable expected, and that we will provide all of the products and services for these programs in accordance with the applicable service standards and performance obligations.
2025 Revenue Target ($1.5 billion)
The recent award of our three flagship programs also represents a significant portion of the expected revenue growth through Fiscal 2025, without taking account of additional revenue opportunities expected to be created through our participation in those programs. The duration of these programs provides significant visibility through Fiscal 2025. The remaining portion of the assumed growth from Fiscal 2020 to Fiscal 2025 is expected to come from increased revenue in each of our business areas, which in each case is supported by our current pipeline of identified upcoming program opportunities.
- Flagship Programs. Growth in revenue from our three flagship programs accounts for approximately 31% of the anticipated increase in revenue from Fiscal 2020 to Fiscal 2025. The expected revenue from each of these programs in Fiscal 2025 is based on the currently established scope and timetable for each program and assumes that we will provide our services in accordance with the applicable standards and performance obligations. While there can be no certainty that (i) these programs progress on the currently expected timetable, and (ii) that we will adequately meet the required performance obligations in the coming years, we believe our expectations for Fiscal 2025 revenue from these programs is reasonable based on (i) current information with respect to our work scope and program timetable, and (ii) our historical performance track record of executing and meeting all applicable obligations on similar large programs.
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MDA
Financial Target Assumptions (cont'd)
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Geointelligence. Growth in our Geointelligence business area (excluding revenue from CSC described above) accounts for approximately 35% of the anticipated increase in revenue from Fiscal 2020 to Fiscal 2025. The anticipated growth can be bifurcated into two key areas:
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Earth observation data and services. Our target for Fiscal 2025 revenue implies a 5-year CAGR of approximately 11% (2020 to 2025), which compares to an estimated industry CAGR of 5.7% (2019 to 2029). We expect to grow our EO data and services revenue faster than the market through the development of (i) SARnext, our next-generation EO radar satellite which will significantly expand our capabilities and, as a result, enable us to increase sales to existing customers and expand our customer base, and (ii) the development of a best-in-class maritime domain awareness information services platform, including the development of our cloud-based ground station solution, which will enable us to expand our customer base and increase our market share in the rapidly expanding market for geospatial imagery analytics which is expected to grow at an approximately 16% CAGR from 2020 to 2025.
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Large programs with the Canadian government. We have a longstanding track record of executing large programs in partnership with the Canadian government in several areas, including the design and construction of EO radar satellites, sensors and radars for military applications, and command and control systems for ship-based and on-shore military applications. The Canadian government has identified and is in the early planning stages for several upcoming large programs where MDA is either the incumbent supplier or well-positioned to secure a prominent role in developing these solutions for the Canadian government. Specifically, future opportunities for MDA include two next-generation EO satellites: (i) the Defense Enhanced Surveillance from Space-Program ('DESPP') for the Department of National Defense, and (ii) the Earth Observation Service Continuity Program ('EOSC') for the CSA. These two programs have an estimated total cumulative revenue opportunity to MDA of approximately $3 billion, which is expected to be realized over a period of ten years, similar to other large EO satellite programs built for the Canadian government. MDA is the incumbent supplier to the Canadian government via its role over the past 25 years in the design and construction of each prior generation of EO satellites, which includes RADARSAT-1, RADARSAR-2 and RADARSAT Constellation Mission. The revenue opportunity from these two programs is expected to extend beyond Fiscal 2025. In addition, MDA has identified three other significant defense-related programs with the Canadian government in areas where MDA is the incumbent supplier. These programs represent an estimated total cumulative revenue opportunity to MDA of approximately $224 billion from Fiscal 2022 to Fiscal 2025. While there can be no certainty (i) that these projects go forward on the terms we expect, or at all, nor (ii) that MDA will be selected as the prime contractor, we believe we are well-positioned to continue to partner with the Canadian government on these large missions where we have extensive capabilities and a strong track record of past success.
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Robotics & Space Operations. Growth in our Robotics & Space Operations business area (excluding revenue from Canada/mO described above) accounts for approximately 15% of the anticipated increase in revenue from Fiscal 2020 to Fiscal 2025. This anticipated growth represents a CAGR of approximately 14% (2020 to 2025) and is supported by a combination of new business award opportunities we have identified and that we expect to materialize in the robotics market and that we expect to bid on but may not win. Specifically, the anticipated revenue level in Fiscal 2025 is supported by our current pipeline of identified opportunities which represents a revenue opportunity in Fiscal 2025 that is 1.9 times greater than our anticipated revenue level. In addition, we expect the overall pipeline of available opportunities to increase in future years driven by anticipated growth in the space industry, including increased mission activity as well as increasing demand for new applications in the areas of on-orbit servicing, in-space assembly, asteroid mining, and space debris monitoring and removal. For the purposes of our targeted revenues for Fiscal 2025, we have assumed, though there can be no assurances in these regards, that we will secure only a portion of those opportunities consistent with our historical win rate for Robotics & Space Operations contracts, that the projects underlying these new business award opportunities progress within the scope and on the timetable expected, and that we will provide all of the products and services for these programs in accordance with the applicable service standards and performance obligations.
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Satellite Systems. Growth in our Satellite Systems business area (excluding revenue from Telesat Lightspeed described above) accounts for approximately 25% of the anticipated increase in revenue from Fiscal 2020 to Fiscal 2025. This anticipated growth represents a CAGR of approximately 28% (2020 to 2025) and is supported by a combination of new business award opportunities we have identified and that we expect to materialize in the satellite market and that we expect to bid on but may not win. As described above, the anticipated revenue level in Fiscal 2025 is supported by our current pipeline of identified opportunities which is significantly higher than at any other point in our history and represents a revenue opportunity in Fiscal 2025 that is 5.5 times greater than our anticipated revenue level.
We are providing 2-year and 5-year revenue targets as we believe these are the most relevant metrics to reflect our near-term and medium-term growth prospects. Fiscal 2025 is utilized as the medium-term target year because the 5-year outlook is a standard theme of reference used by MDA and many others. In our view Fiscal 2025 is representative of our medium-term growth potential, consistent with our expectations for proximate fiscal periods. For example, as described in "Revenue Targets", we expect the east majority of our work on the first phase of the Telesat Lightspeed to be substantially complete in Fiscal 2024. Targeted Fiscal 2025 revenues reflect the anticipated decline in those revenues, and do not include the opportunity to supply Telesat Lightspeed with additional satellites in the anticipated second phase of the program. Additionally, our Fiscal 2025 revenue target includes only a small portion of the total expected revenue opportunity associated with the anticipated EOSC and DESS-P satellite programs that the Canadian government is in the early stages of procuring, assuming these programs progress as expected and MDA is involved, we would expect our revenues in Fiscal 2026 and subsequent following years to be higher than the revenue level targeted for Fiscal 2025. While our targeted revenue growth from Fiscal 2022 to Fiscal 2025 is not linear in nature, we expect steady revenue growth throughout this period based on our expectations for continued growth with existing customers, including our flagship programs, as well as assumed revenue from new customers conservatively based solely on opportunities in our current pipeline.
Adjusted EBITDA Targets
Fiscal 2022 Target
We believe an opportunity exists to grow our Adjusted EBITDA to between $160 and $180 million in Fiscal 2022, which implies an Adjusted EBITDA margin range of 18% to 23% on our target range for revenues in Fiscal 2022 of $800 to $900 million. For context, excluding the benefit received under the Canadian Emergency Stage Subsidy in Fiscal 2020 ($42 million), which we currently do not expect to qualify for in subsequent years, Adjusted EBITDA was $85 million which implies a margin of 21%. The Adjusted EBITDA margin in Fiscal 2019 and Fiscal 2018 was 25.9% and 29.4%, respectively. Please refer to the heading "Non-IRIS Financial Measures – Discussion of Adjusted EBITDA Trends" in the MDAA for a description of the decline in the Adjusted EBITDA margin from Fiscal 2019 to Fiscal 2020.
Our targets for Adjusted EBITDA assume that we will achieve the revenue targets set out above. These Adjusted EBITDA targets are also based on (i) assumed gross margins which consider the targeted revenue mix and are informed by both our historical performance for similar programs as well as our current expectations of profitability for secured programs and (ii) expected growth in selling, general and administrative and research and development expenses which we expect will be required to realize our revenue growth targets. We expect these expenses to grow in a manner that is proportionate to the growth in our revenues. More specifically:
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The anticipated gross margin in Fiscal 2022 is informed by (i) our historical performance, and (ii) our current expectations of profitability for the flagship programs, which on average are expected to have modestly lower gross margins as compared to our overall historical gross margin. Given the above statement and the significant size of the flagship programs, we expect our gross margin percentage in Fiscal 2022 to be modestly lower than our historical gross margin.
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The Fiscal 2022 Adjusted EBITDA target range incorporates anticipated higher spending in the areas of research & development and selling, general and administration, which is required to support the anticipated ongoing increases in revenue. When measured as a percentage of revenue, these costs are expected to decrease as a result of the significant anticipated increase in revenue, which is primarily driven by the flagship programs in this period.
Long Term Target
We have a long term target for our Adjusted EBITDA margin of 18% to 20%. Similar to the above description of the Fiscal 2022 target, this long term target assumes that we will achieve the revenue targets set out above and takes into account (i) the anticipated gross margin that results from our anticipated revenue mix and (ii) anticipated growth in research and development and selling, general and administrative expenses which we expect will be required to realize our revenue growth targets.
Our ability to achieve the targets referred to above is subject to a number of risks, challenges and uncertainties, including those described under the headings "Forward-Looking Information" and "Risk Factors," all of which may cause actual results to vary materially from those set out in our targets. There can be no assurance that any or all of the potential projects described above will go forward on the terms we expect, or at all, or be completed as anticipated, or that we will be awarded any or all of the projects that will intend to bid on and that are reflected in our targets for revenues and Adjusted EBITDA, or any future phases of our existing or future projects. If the amount or type of future awards of new business to us fall short of our expectations or are inconsistent with our past experience, we may not achieve the referenced targets. In addition, delays or other issues relating to our performance under our contracts may require us to incur additional costs, which may have a material adverse effect on our revenues and Adjusted EBITDA. The targets referred to above also reflect our assumptions regarding the number and type of opportunities for new business awards that will arise in the future, which in turn reflect our assumptions regarding the general growth and direction of the space industry over the next five year period. We have assumed that general economic conditions will remain stable and that the ongoing COVID-19 pandemic will not have a material adverse impact on the volume of projects that we may bid on or on our ability to perform work under our contracts, that the overall space industry will continue to grow at a rapid rate and that government policy, including budgetary policy, will remain supportive of the industry.
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