MDA Space Ltd (MDA) Earnings

Management highlights

### Overall Quarterly Performance - Q2 2026 total revenue grew 34% year-over-year, with first half 2026 revenue reaching $963 million (up 33% YoY) - Q2 2026 adjusted EBITDA was $96 million (19.3% margin), with year-to-date adjusted EBITDA reaching $187 million (19.4% margin) - Q2 book-to-bill ratio was 1.6x, with net order bookings exceeding $800 million, ending the quarter with a $4 billion backlog (pro forma $4.4 billion including post-quarter Telesat expansion) - Total opportunity pipeline stands at $40 billion, with $10 billion in down-selected or follow-on opportunities ### Key Contract Wins (Post-Quarter Close Included) - Telesat expanded the Lightspeed LEO constellation contract by $474 million, adding 27 additional MDA Aurora satellites for a total of 225 fully funded satellites - Canadian Space Agency (CSA) awarded a $600+ million follow-on contract for a fourth advanced synthetic aperture radar satellite in the Radarsat Constellation mission - Mitsubishi Electric contracted MDA for digital payload, antennas and subsystems for Japan's next-generation geostationary defense communication satellite - Selected by BAA Systems to deliver antennas and control electronics for the U.S. Space Systems Command MEO EPIC-2 constellation - U.S. Air Force renewed 49 North's Global Procedure Designer Services contract with a $43 million ceiling through June 2031 - Pre-authorization received from OHB Germany to begin work on lunar landing sensors for ESA's Argonaut moon mission - CSA confirmed plans to repurpose Canadarm3 investments to support lunar exploration for the Artemis program ### Operational Milestones - Inaugurated a new high-volume satellite manufacturing facility in Montreal, doubling production floor space to meet growing demand for satellite constellations - MDA Chorus next-generation Earth observation constellation: full integration of the main C-band spacecraft is complete, X-band satellite completed pre-ship review, launch targeted for late 2026; new Quebec control facility is under development - 49 North completed a full product refresh of Global Procedure Designer aligned with latest regulatory standards ### M&A Growth Strategy - Agreed to acquire Blue Canyon Technologies (BCT), a profitable Colorado-based spacecraft manufacturer with 18 years of flight heritage, for transaction closing expected in Q4 2026. BCT will add ~$5 billion to the opportunity pipeline, provide cleared access to classified U.S. defense programs, and add complementary guidance/navigation technology that enables vertical integration - Agreed to acquire a majority stake in CLS, a global vertically integrated geo-intelligence provider serving 14,000+ customers across 150 countries. CLS brings decades of archived Earth observation data, mature AI/ML analytics, and establishes a strategic MDA presence in Europe, opening access to the European space ecosystem - Combined pro forma 2026 revenue for the standalone company plus both closed acquisitions is projected at $2.5 billion - The two acquisitions total ~$2 billion, financed via $1.15 billion in gross equity proceeds and $600 million in senior unsecured notes, resulting in a leverage ratio of 1.5x-2.5x net debt to LTM adjusted EBITDA, in line with targets ### New Business Lines & Capabilities - Launched 49North (Canadian non-space defense subsidiary) and MDA Midnight (a new on-orbit satellite protection product line that can be delivered as a spacecraft or service leveraging MDA's rendezvous and proximity operations experience) - Space RAN is a collaborative consortium-led initiative to build a sovereign Canadian direct-to-device and IoT space network, expected to be funded primarily by partners with no large near-term MDA investment - MDA now develops its own space-grade chips and on-orbit compute capability, with the first on-orbit processor launching on MDA Chorus in 2026, enabling future edge AI applications - Deployed an internal on-premises generative AI platform (ChatMBA) for all 4,000 employees, with active pilot programs to expand AI use cases across enterprise operations to boost productivity

Guidance

- MDA raised the midpoint of full year 2026 guidance, updating the revenue range to $1.8 billion to $1.9 billion (previous: $1.7 billion to $1.9 billion), with a 1.85 billion midpoint implying 13% year-over-year growth (up from 10% previously projected) - Full year 2026 adjusted EBITDA guidance range updated to $330 million to $370 million (previous: $320 million to $370 million), with the new midpoint implying 8% year-over-year growth (up from 7% previously projected) - Adjusted EBITDA margin guidance maintained at 18% to 20%, full year capital expenditure guidance maintained at $225 million to $275 million, and full year free cash flow guidance maintained at neutral to negative - 2026 guidance excludes revenue contribution from the BCT and CLS acquisitions, which are pending regulatory approval and closing; combined pro forma 2026 revenue including both acquisitions is $2.5 billion - Management expects ~50% total growth (organic plus closed acquisitions) in 2027 compared to 2026 guided standalone revenue, with over one-third of total 2027 revenue expected to be recurring - The combined pro forma entity after both acquisitions is expected to maintain adjusted EBITDA margin within the 18% to 20% range

Segment performance

Total Q2 2026 revenue for MDA Space was $499 million, a 34% year-over-year increase across all three business segments. 1. Satellite Systems: Reported revenue of $336 million, representing a 44% year-over-year increase, contributing 67.3% of total Q2 revenue. Growth was driven by higher volume on the Telesat Lightspeed program. 2. Robotics and Space Operations: Reported revenue of $100 million, representing a 13% year-over-year increase, contributing 20.0% of total Q2 revenue. Growth was driven by increased activity on the Canadarm3 program. 3. Geointelligence: Reported revenue of $63 million, representing a 20% year-over-year increase, contributing 12.6% of total Q2 revenue. Growth was driven by higher volumes across new programs including the I-STAR program for the Royal Canadian Navy.

Risks & headwinds

- Forward-looking statements are estimates, and actual results may differ materially from projections due to various unforeseen factors, including regulatory delays for acquisition approvals - Working capital fluctuations on large major contracts can lead to periods of negative operating and free cash flow, as seen in the first half of 2026 - Government defense and sovereign procurement cycles can be extended, leading to delays in contract award and revenue recognition for large pipeline opportunities - The Space RAN initiative depends on successful Canadian government spectrum allocation, partnership funding, and anchor customer adoption, with revenue potential not yet included in official guidance

Analyst Q&A

• Q: The company has laid out a broader, more ambitious strategic roadmap. Would combining manufacturing activities with new operating initiatives like Space RAN make strategic sense? /

  A: Management plans to keep satellite systems manufacturing, which supplies components and complete satellites to global customers and network operators, separate from new operating businesses like Space RAN. Space RAN is a distinct business model focused on sovereign Canadian capability with international collaboration, so keeping it separate allows for focused development of the new initiative.

• Q: What demand dynamics are you seeing from NATO Plus countries amid rising sovereign defense spending, and how is this driving the company's global expansion? /

  A: A global trend of increasing sovereign defense and security spending is driving new opportunities, with the U.S. growing defense space spending and other nations also increasing investment to build domestic industrial capability. The BCT acquisition positions MDA to better access U.S. defense programs, while the CLS acquisition establishes a European footprint to access regional opportunities. Management notes growing cross-country collaboration among middle power nations, and Canada's long-standing space industry leadership positions MDA to benefit from these bilateral exchange opportunities.

• Q: What is the status of the Space RAN initiative, including its revenue opportunity and inclusion in the current pipeline? /

  A: Management declined to comment on projected revenue for Space RAN, confirming it is not included in the company's current $40 billion opportunity pipeline, as it is an early-stage business development activity conducted in partnership with third parties. The Canadian government is currently running spectrum allocation consultations, which MDA is actively participating in, while the team continues to advance constellation design and discussions with potential anchor customers in Canada and globally.

• Q: Why is implied second half 2026 revenue growth lower than the strong first half growth, and is this due to capacity constraints? /

  A: There are no capacity constraints; the slower second half pace is normal program scheduling: strong first half execution on Telesat Lightspeed recognized revenue from component and subsystem delivery, and the program is now transitioning to assembly, integration, and testing, which will slow near-term revenue recognition. Management confirms the full year guidance midpoint was raised to reflect strong first half execution, and new programs will ramp up in 2027 to drive solid organic growth next year.

• Q: Is MDA pivoting away from commercial space to focus primarily on defense and sovereign markets, and if so, is this due to faster demand growth or more difficult commercial competition? /

  A: MDA remains balanced between commercial and government/defense markets. While recent activity and market trends have increased dialogue around sovereign defense opportunities, commercial space growth remains strong, and the $20 billion increase in MDA's total pipeline over the last 18 months includes both defense and commercial growth, with strong ongoing opportunities in commercial space networks, lunar commercial activity and other commercial segments.