What MDA Space (MDA) Said on Its Q3 Earnings Call

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Gross margin declined to 25.3% from 26.4% a year earlier because of a change in program mix. Adjusted EBITDA margin fell to 19.3% from 20.2%, reflecting that mix and higher planned selling, general and administrative investment.

Adjusted net income rose 26% to CAD 60 million, but adjusted diluted earnings per share remained unchanged at CAD 0.37. CFO Guillaume Lavoie said the increase in net income was offset by a higher share count following issuances in March and July.

Cash Flow and Backlog

Operating cash flow was CAD 106 million in the third quarter, producing free cash flow of CAD 62 million. For the first nine months, operating cash flow fell to CAD 74 million from CAD 353 million a year earlier, while free cash flow swung to negative CAD 116 million from positive CAD 185 million.

Lavoie attributed the year-to-date operating cash flow decline to expected working capital fluctuations on major programs. Higher capital expenditures also contributed to the free cash flow swing. He said the company could consume some cash in the fourth quarter but remained comfortable with its full-year guidance.

MDA Space ended the quarter with a net cash position of CAD 1.3 billion and total liquidity of CAD 2.9 billion, including CAD 2.2 billion in cash. Lavoie said most of the cash was earmarked for the acquisitions.

Backlog stood just under CAD 4 billion, down CAD 444 million from a year earlier but in line with the prior quarter. The company recorded approximately CAD 1.6 billion in gross bookings during the first nine months of 2026.

Telesat Progress and 2027 Growth

Asked about Telesat's launch schedule and software integration, Greenley said there was no change to MDA Space's financial forecasts for the business or the Lightspeed program. He said MDA was completing the Pathfinder satellites and assembling the elements needed for full satellite production.

"From a hardware perspective, we are in a solid place," Greenley said. Software development involving both MDA and Telesat was continuing, he added, with the Pathfinder satellites expected to be completed before the recently communicated launch dates.

Lavoie said approximately CAD 1.4 billion of the company's backlog was tied to Telesat. He said there was no major payment expected specifically for delivery of the Pathfinder satellites because the contract's milestone payments were divided into smaller steps.

While the company has not issued 2027 guidance, Lavoie said it expects double-digit growth in its current business next year. He said Telesat would continue to generate substantial revenue, Canadarm3 would be a steady contributor, and work on Globalstar's next-generation constellation would gradually ramp down. MDA expects to provide a more detailed financial plan in early March.

Acquisitions and Satellite Programs

Greenley said MDA expects to close its acquisition of U.S.-based BCT later in 2026 and its acquisition of CLS in late 2026 or early in the first quarter of 2027. Regulatory approvals and other closing conditions remain outstanding.

On a pro forma basis, the two companies combined would have contributed almost CAD 700 million in additional 2026 revenue, Greenley said. MDA expects CLS to expand its Earth observation distribution network and increase recurring revenue to more than 30% of annual company revenue.

Greenley also highlighted the August deployment of eight replacement satellites for Globalstar. Globalstar established communications with each satellite, and initial health assessments indicated they were performing as expected. MDA expects to deliver the remaining nine satellites later this year.

The company is preparing for the launch of MDA CHORUS, an Earth observation constellation that will combine two new satellites with RADARSAT-2. Greenley said early contracts and letters of interest provide a commercial foundation for the system. He recalled that well over a third of the letters of intent were from new customers, while noting he did not have an exact figure.

Among recent awards, MDA received authorization from Thales Alenia Space to begin work on digital antennas and a controller for 66 satellites in Europe's IRIS² constellation. Greenley described the award as an entry point into the program, while noting that governments also seek domestic industrial participation in large projects.

About MDA Space (TSE:MDA)

Building the space between proven and possible, MDA Space (TSX:MDA; NYSE:MDA) is a trusted mission partner to the global defence and space industry. A robotics, satellite systems and geointelligence pioneer with a 55-year+ story of world firsts and more than 450 missions, MDA Space is a global leader in communications satellites, Earth and space observation, and space exploration and infrastructure. The global MDA Space team of more than 4,000 space experts has the knowledge and know-how to turn an audacious customer vision into an achievable mission - bringing to bear a one-of-a-kind mix of experience, engineering excellence and wide-eyed wonder that's been in our DNA since day one.

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